What Is An Advance Loan?

The term “cash advance” can be used to describe a couple of methods of short-term borrowing that have a mutual purpose—quick money in times of need. Nowadays, there are many ways to get a same day loan. But whether you get your loan at a storefront or choose a cash advance online, the same rules apply. So make sure you know the details of your loan and lender before signing on the dotted line. 

There are three types of cash advances: cash advance loans, credit card cash advances, and employer cash advances. In contrast to the other two cash advances, employer cash advances don’t fully qualify as traditional loans. You may also hear the term “merchant cash advances,” but these are basically alternatives to small-business funding if you own a company. For our purposes, we’ll be focusing on cash advance loans and credit card advances.

An employer cash advance technically is borrowed money, but it doesn’t necessarily need to be returned. The reason is simple: you’re borrowing from your own paycheck; the money is just given to you by your employer sooner than you would usually get paid. This can be a good way to avoid traditional loan fees, online apps, and a $400 loan application process. But one of the cons to this is that it could strain your relationship with your employer if you do it too often.

A personal loan is a loan that you can use for any purpose. Personal loans generally incur lower interest rates than credit cards, so they can be a good choice if you need to borrow money.

Before deciding on a personal loan, you should calculate how much the loan will cost you. This includes the interest you will pay on the loan and any fees associated with taking out the loan. Once you know all of this, you can decide if the total cost of the loan is something you can handle.

Four major elements can affect the cost of borrowing. Understanding them will help you decide if a personal loan is good for you.

To apply for a payday cash advance, or payday loans in general, you would simply need to write a check dated for the day your next paycheck will arrive, and then apply with an online or storefront lender. The amount you put down on the check is the amount you want to borrow, with the addition of the lender’s fees and interest. After that, you would get the money in cash or transferred to your account to spend it however you wish, usually within one or two business days. Keep in mind that payday advances can come with extremely high interest rates and fees. And they can often lead borrowers into a cycle of debt that’s difficult to escape. 

Even if you know that your next paycheck will cover the costs, a cash advance may not be the safest way to take care of an unplanned expense. While it may be good to get a loan without making a long-term commitment, it could also lead to more debt and fees in the future. And if you have a decent credit score you may qualify for another type of loan with better rates or a line of credit with more flexibility.