Cash Advance vs Payday Loan: What Are the Differences?
Cash Advance vs Payday Loan: What Are the Differences?
In America, it’s said that around 61% of the population are living paycheck to paycheck each month. And without a spare dollar in hand, if you’re part of the 61%, you have likely encountered one or many of life’s emergencies or setbacks.
Perhaps you’ve found yourself needing an immediate cash advance at some point in your life. And if it ever happens again, you’d like to be prepared with the right information so you can pick the right loan for your situation.
Keep reading to learn more about the differences between cash advance vs payday loan.
Cash Advance vs Payday Loan: Definitions
Payday loans and cash advances are often used interchangeably, but there are some key differences between the two. A cash advance is a short-term loan that is borrowed through your credit card. A payday loan is a short-term, high-interest loan that is typically due on your next payday.
The main difference between the two is the interest rate. Payday loans have a higher interest rate than cash advances.
The Benefits
One of the cash advance benefits is that you can often get the money you need fast, sometimes within 24 hours. You also may not need to undergo a credit check to qualify. It can be a great option for people who need money quickly and don’t have time to wait for a traditional loan to be approved.
Payday loans are quick and easy to get. They may also be easier to qualify for than a cash advance, especially if the borrower has bad credit.
The Drawbacks
The main downside of getting a cash advance is that interest rates are typically much higher. Additionally, there is usually a fee associated with getting a cash advance. This can often be a percentage of the amount you are borrowing, which can add up quickly. Finally, cash advances can damage your credit score, as they are considered a form of revolving debt.
With a payday loan, you will typically be required to repay the entire loan amount plus interest within a few weeks. This can be difficult to do if you are already struggling to make ends meet. If you default on a payday loan, you may be subject to aggressive collection practices, such as wage garnishment.
Both cash advances and payday loans can be expensive and risky. Be sure to consider all of your options and learn more by doing your own research before taking out a loan.
Which One Is Right for You?
In terms of cash advance vs payday loan, the right one for you depends on your needs and circumstances. If you need cash quickly and don’t have a lot of money to repay, a cash advance may be the better option. If you have bad credit and are willing to sacrifice money from your next payday.
Both types can help you get the cash you need when you need it, but be sure to study the terms and conditions of each before making your decision.
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