What is the difference between a cash advance and a payday loans

Whenever you find yourself short of money in between bills and short of money, you may need some help to settle the bills and emergency expenses. Borrowing money from payday loan and credit advance may be a good option. You can obtain money as fast as you need it. Cash advances may look similar to payday loans but they are different in many perspectives. Learning the difference between the two will help you decide which one is more convenient.

So what is the difference?

A cash advance starts accumulating interest as soon as the money hits your bank account. Unlike credit purchases or bank loans, the payment method of a cash advance is effective immediately with no grace periods. Even though the same may apply to payday loans, the repayment methods are different. For cash advance repayment, you can carry the debt for a long-term period and pay in instalments. You are required to pay your payday loan as soon as your pay check is deposited in the bank.

The interest rates on a payday loan are fixed while those of cash advance depend on how long you carry the loan. For a cash advance, you pay a fee for the amount you withdraw from the bank then pay interest according to the time you carry the debt. For pay day loan you are charged an interest up-front depending on the amount you borrow. When you take a cash advance, you could pay it in a week to avoid interest accumulation, but no matter how soon you pay your payday loan, the interest will always remain the same.

The amount you can borrow using cash advance depends on your monthly income while payday loans have strict legislative restrictions that apply to everybody. In cash advance you may be able to obtain a loan that is up to 80 percent of your salary. Pay day loans differ according to the lenders. For example some pay day lenders offer from 500 to 5000 Euros, no more or less. The amount you receive from a payday loan depends on the lenders restrictions.

There are fewer requirements to pay a payday loan compared to a cash advance. To take a cash advance, the lender may need access to your credit, credit and debit transactions, check payments and bank statements. The specific requirement may vary between cash advance lenders. For a payday loan, you are required to provide personal identification and proof of income or employment.  You provide your income check so that the lender can set the payment date of your loan.  The money you receive from a payday is deposited directly into your standing bank account and electronically deducted on the due date.  You can pay your loan in multiple instalments but the interest will remain the same.

Which is the better option?  Making a decision on which lending option is convenient for you depends on your income, purpose and capabilities to pay the loan back. Before taking a short-term loan, review your situation, interest and whether you will be able to pay back the loan in time.

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