These days, in case of contingency costs, people frequently defer to the facilities of short-dated crediting options like payday loans or cash advances. The overriding goal of such forms of crediting is to help customers cover these expenses and survive until the next pay check. The main benefit of such forms of credits is that they are available to almost all customers. Nevertheless, they carry high percentage rates. So, borrowers have to choose them only in case other means of obtaining cash are not available at the moment. Besides, before you make your choice in favor of one or another crediting option, you need to decipher the difference between these two terms. Having learned this theme, you will avoid a number of risks related to one or another crediting option.
In some instances, people consider that the term “payday loans” means the same as the term “cash advance” means. Nevertheless, cash advance means the sum of money you’ve got through the services of credit cards.
What is a Payday Loans?
The overriding goal of such loans is to provide borrowers with fast money. They are named in such a way only because of the necessity to pay back them when a borrower receives the next salary. As a rule, payday loans haven’t strict requirements to the borrowers. Their targeted audience are those customers who have no time for obtaining ordinary credits from banking establishments and those who wish to borrow the larger sum than the one offered by their credit cards. Besides, a payday loan is the best resolution for borrowers without credit cards.
The average sum of such loans ranges from $100 to $1000. In most instances, this limit is checked by the law of the state. Currently, lenders do not have strict requirements to their clients and ask them to indicate only their personal data, income verification letter and a number of the debit card. Mostly, borrowers apply online and as a rule, this procedure lasts no more than 20-30 minutes.
Nevertheless, payday loans have a high lending rate. The total amount of service fees may be higher than the sum borrowed.
You will not get cash advances if you haven’t a credit card. As a usual thing, if you are the owner of a credit card, you can easily take the sum of cash against it. It acts the same as any purchase you make using your credit card, but instead of any purchased thing, you “buy” cash.
The repayments terms are also different in contrast with payday loans. Generally, these conditions do not differ from the terms of your credit card. Besides, not all companies let you withdraw the pre-approved credit at one haul. In some instances, the borrower can pay back cash advance only when the rest of charges have already being paid back. The percentage rate is also rather high.
According to the statistics data, the APR of cash advance equals to 300% but the interest rate is usually fixed.
No one but you should decide which crediting option is more profitable in your particular case. Nevertheless, to avoid problems with disbursement of a loan, you should know that both forms of crediting are the best solution only in case of emergent situations.