If you do an online search or two looking for unsecured loans, you may have seen these two terms: payday loans and cash advances. Some people tend to use them interchangeably. They are both types of online personal loans, but they are different. There are many other types of personal loans that range from small loan amounts to large loan amounts. Some larger personal loans can be repaid over a period of a few years. But payday loans and cash advances are typically considered short-term loans taken out to help with some immediate expense like paying for an emergency or past due bills.
Payday loans are also known by names like “online personal loan” or “payday advances.” This type of loan is an unsecured loan, which means the borrower doesn’t have to add collateral. There is also not usually a credit check required to be approved for this type of transaction. Characteristics of payday loans include:
Payday loans can be obtained at a local facility where the agency is located or taken out online. Online payday loans:
When you get a payday loan at a facility, you will usually give them a post-dated check, which will be deposited on the due date, usually on your up-coming payday. Online payday lenders sometimes require that borrowers give a canceled check so that they can make an electronic payment from your account.
The total amount that you can borrow usually depends only on your income and your next check.
Some people use cash advance and payday loans synonymous, and there are some basic similarities. There are basically three types of cash advances.
Cash advances on a credit card can have a very high-interest rate. It can also carry a hefty transaction fee. You can use any ATM to get your cash advance, but the ATM may also charge you another price. The interest is the tricky part of a cash advance on a credit card.
Either one can give you a better deal depending on your financial situation. Which one works better for you depends on your credit card and the terms of the payday loan. Sometimes credit card companies have higher interest rates on a cash advance than they do on regular purchases.
These are viable options for you if you need quick cash to take care of an urgent financial matter. They both have higher than normal interest rates and fees associated with them. The main thing to be concerned about is being able to pay them back on time. The cash advance might end up affecting your credit score if you do not make the payments on time since most credit card companies report payment habits to the major credit bureaus. As long as you pay the regularly scheduled payments on time each month, they can improve your credit score. But a payday loan will not always help improve your credit score but can affect it negatively if you don’t pay it off on time.