Cash Advance vs. Payday Loans

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If you’re looking for a short-term loan, it’s easy to find yourself comparing a cash advance vs. payday loans. Both offer immediate assistance, so they’re ideal if you need help covering the bills or paying for an emergency item or service, but there are differences you should consider.

Let’s explore:

  • What Payday Loans Are
  • What Cash Advances Are
  • Which You Should Choose

What are Payday Loans?

Sometimes called “online personal loans” or “payday advances,” payday loans are unsecured, meaning you don’t put up any collateral. They usually don’t involve a credit check, and they are granted based on your income. If you make more, you can usually borrow more.

A payday loan is designed to be paid back in full on a specific date. Money is often taken straight from your paycheck or from alternate sources of income, such as Social Security checks. Your credit score isn’t a factor, but you may be turned down if you have previously filed for bankruptcy. Bankruptcy affects credit, but is in and of itself a red flag to lenders. There are plenty of online payday loan services, so you can secure the money you need even if you’re in Idaho and the headquarters is in Michigan or Wisconsin.

What is a Cash Advance?

There are three main types of cash advance:

  1. The amount borrowed is based on your income and repaid in a month or when you get your next paycheck.
  2. The advance is based on your line of credit, usually a credit card. In this sense, it is more like a payment you make with your card, and repayment depends on the card’s policies and terms.
  3. The advance is obtained directly from your employer. Interest and added fees aren’t charged, but money comes right out of subsequent checks.

Cash Advance vs. Payday Loan: Which Should You Choose?

Either option can help depending on your financial situation.

  • Payday loans don’t require a credit check, but the fact that they’re unsecured often means higher interest rates, though these could drop if you use the same online service multiple times.
  • Cash advances can help improve your credit score if you pay them back on time, but you do need a good line of credit to proceed.

Cash Xpress Helps Provide the Right Financial Assistance to Meet Your Needs

Want to learn more about short-term loans or take one out? Simply contact Xpress Cash directly or pay a visit to your closest location.