Is there a difference between a cash advance and a payday loan?

Is there a difference between a cash advance and a payday loan?

Sometimes, you find yourself in a financial emergency that needs an immediate response.  Getting help to settle your financial issues may be hard. One of the quickest ways to settle such issues is through a loan. Getting a payday or short term loan can’t be that simple, especially when you have a financial crisis and a bad credit report.  The two best options to settle a financial issue are taking up a cash advance or applying for a payday loan. The question is, which one is better?

Here are some of the differences

Interest rates

A cash advance will accumulate interest as soon as you receive the money from your lender. It is different from a conventional loan and a credit purchase in that the payment of the advance is effective as soon as the money hits your account.  The same applies to a payday loan, the interest accumulates almost immediately. When you apply for a payday loan and it becomes successful, the lender will impose a full interest on the amount before depositing the money.

The interest rates may be imposed in a similar way, but are different depending on the type of loan. While the interest rates of a payday loan are fixed, those on a cash advance will depend on how long you will pay the loan. The slower you pay your cash advance, the more interest is imposed on the loans and therefore you will end up paying a higher amount in the advance. For the payday loan, the interest rates and loan are paid in full at the same time before the indicated deadline. No matter how soon or late you repay the cash advance, the interest rates will always remain the same.

The loan limit

The limit of a cash advance depends on your salary and the lender’s terms and conditions. Some lenders can give you up to 80% of your salary as the cash advance. This means the higher your salary, the more the cash advance you will get

Payday loans have strict legislative restrictions that apply to everybody. The government has general rules that apply to all payday lenders. In some regions, they can only offer an amount agreed upon by the government.

The requirements

To qualify for a cash advance, you will need an identification card, proof of income, a constant salary and an active bank account.  Lenders will need to make sure you have a stable job that will prove and verify your source of income, you don prove this by providing your employers’ contacts. The id is simple to show that you are from the same state. They will use the bank account for the deposit and repayment transactions.

Payday loans do not need too many requirements. If you have a legitimate identification card and an active bank account you can simply qualify for this type of loan. lenders do not need to check on the credit card statement to issue you with either of these two loans.

Final word

These two methods of loan application are perfect when you have a financial crisis. You can choose the best depending on how much money you need and your qualifications.