Because there are so many online payday CT different names for short-term loans found online, it can be difficult for consumers to know the differences between them. This is especially true when it comes to payday loans because of the various names used interchangeably to describe the same product.
“Payday loans” is the most common term for referring to short-term personal loans that are typically due to be repaid using a consumer’s next paycheck. They may also be known as payroll advances, payday advances, faxless payday loans, no credit check payday advances, and more.
These loans are most often available in small amounts up to $1,000 or $1,500, and have APRs ranging, on average, from 390% to 780%. Yes, you read that right. They are also considered to be unsecured loans because lenders do not require collateral. While this may be beneficial because a valuable asset, such as a vehicle or home, will not be lost if you default on a loan, it also means that a lender can sue you in the event that you default on the loan.
Payday loans do not require applicants to undergo credit checks to be eligible. By doing so, even those with poor credit ratings can get fast cash when it is needed. This can cause issues for those who are in financial distress with low credit scores, who are still able to qualify for this type of loan.
Because of today’s fast-paced world, online loans are the most popular with consumers looking to get quick cash. All it takes to get a loan is an Internet connection and a few minutes dedicated to filling out an application. However, for those that do not like to work with computers or do not have Internet access, there are still physical stores that offer loans to those in need.
A word of caution — payday loans may be the riskiest type of unsecured debt. The draw of “fast cash” can be enticing to consumers experiencing a financial crisis, but the extremely high interest rates make it difficult, if not impossible, to pay back these short term loans quickly, without longer term financial consequences.
Payday loans tend to be predatory in the sense that payday lenders are most prevalent in neighborhoods where a significant number of residents cannot qualify for mainstream loans.
The term “cash advance” can refer to the same product that payday loan lenders provide. They are typically the same in every aspect since it is just another name used to draw in more customers. However, another use of the term actually applies to credit cards.
Credit card cash advances are loans taken out using your credit card or line of credit. In many cases, no matter what your credit rating is, you can find credit cards to cater to your needs. However, the loan amounts you receive will depend on your credit limit, and the interest rates attached are higher than with standard credit card purchases. Your loan will also have to be paid off first before any money is put down on debt from existing standard purchases.
As you can see, payday loans and cash advances can be used interchangeably except when the latter term is referring to credit card cash advances. However, no matter what name is attached to a short-term loan, you must always remember that unsecured debt, including these types of loans, must be paid back and will accrue interest. Be aware of the pitfalls to avoid a larger financial crisis down the road.
If you are experiencing financial difficulty and are looking for a solution, non-profit credit counseling can help you make sense of all your options. Contact us today for a free debt analysis with one of our certified credit counselors.