Trustpilot Trophy
America's #1 Debt Relief Company
Get a free debt consultation
1-800-983-6693

If you’re in a bind and need cash fast, a payday loan or cash advance might seem like the perfect solution. But before you take out one of these loans, it’s important to understand how they work and what the potential risks are. This guide will give you the information you need to make an informed decision about whether a payday loan or cash advance is the right option for you.

What Are Cash Advances and Payday Loans

Cash advance loans are typically short-term, high-interest loans that are used to tide the borrower over until their next payday. Payday loans work in a similar way, but they are usually larger sums of money and have to be repaid in one lump sum on the borrower’s next payday. Both types of loans can be useful in an emergency, but they come with a number of risks that should be considered before taking one out.

How Do They Each Work?

A cash advance loan is a short-term, high-interest loan that tides the borrower over until their next payday. The borrower will usually need to provide some form of collateral, such as a car or house, to secure the loan. The interest rate on a cash advance loan is usually higher than the interest rate on a regular loan, and the repayment period is usually shorter.

Similar to cash advances, payday loans are usually for large sums of money and they have to be repaid in a lump sum on the borrower’s next payday. The interest rate on a payday loan is also usually higher than the interest rate on a regular loan, and the repayment period is usually shorter.

Benefits of Cash Advances and Payday Loans

The main benefit of a cash advance loan is that it can provide the borrower with the funds they need in an emergency. The main benefit of a payday loan is that it can help the borrower to avoid bouncing a check or incurring late fees on their bills.

Disadvantages of Cash Advances and Payday Loans

The main disadvantage of a cash advance loan is that it can be very expensive. The interest rate on a cash advance loan is usually much higher than the interest rate on a regular loan, and the repayment period is usually much shorter. This means that the borrower will end up paying back much more than they borrowed.

Learn more about if payday loans are bad

Alternatives to Cash Advances and Payday Loans

There are a number of alternatives to cash advances and payday loans that can provide borrowers with the funds they need in an emergency. Some of these alternatives include personal loans, home equity loans, and reducing your debt.

Personal loans

Cash advance loans and payday loans can be great ways to get emergency funds, but they can also be very expensive and difficult to repay. A personal loan can be a great alternative to a cash advance or payday loan. Personal loans typically have lower interest rates and longer repayment periods than cash advance or payday loans, which means you will end up paying back less in the long run.

Home equity loans

If you have equity in your home, you may be able to take out a home equity loan. Home equity loans typically have lower interest rates than cash advance or payday loans, and you can usually choose how long you want to take to repay your debt. This means that you can spread out your payments and pay off your debt over time.

Reducing your debt

If you are struggling with debt, one of the best things you can do is to try to reduce it. Debt settlement is a great way to reduce your debt, and it can often reduce what you owe by up to half. This means that you can get out of debt much faster and avoid the high-interest rates of cash advances or payday loans.

How Can CreditAssociates Help?

CreditAssociates can help you get out of debt and avoid having to use a cash advance or payday loan. With our debt settlement program, we can reduce your debt by up to half or more, and you pay us nothing until each debt is resolved. We are America’s #1 rated debt relief company with 4.9 out of 5 stars based on over 10,000 Trustpilot reviews. Contact us today at 1-800-983-6693 to learn how you can get started on the path to financial freedom.

Common Questions About Cash Advances and Payday Loans:

What transactions are considered cash advances?

There are many ways you can get a cash advance, and some are better than others. However, the most common forms of a cash advance are withdrawing cash with your credit card or debit card.

Is paying a bill considered a cash advance?

No, paying a bill is not considered a cash advance because you are not withdrawing cash using your credit card.

What credit score do you need for a payday loan?

There is no set credit score requirement for a payday loan and the requirements will likely vary from lender to lender.

Does a cash advance affect your credit score?

If you are able to pay off your cash advance in time, it should not have a negative impact on your credit score. However, missing a payment or making a late payment can negatively impact your credit score.

Learn more about how a cash advance can impact your credit score

How do you get a payday loan without a check?

While most payday loans will require some type of check to take out a loan, there are some lenders that will allow you to get a payday loan without a check.

Learn more about how you can get a payday loan without a check

What does cash advance mean on a credit card?

A cash advance on a credit card means that you can borrow money from the card company and pay it back later. This can be helpful if you need some extra money for a short period of time. Be careful, though, because you will likely have to pay back more interest on the cash advance than if you had just taken out a normal loan.