Sudden money shortage is a fact of life and it can happen to anyone at anytime. When some emergency comes up and you need some cash, then there are only a few options available; you can either ask for a loan from your friends or relatives, you can try your luck with a conventional loaning establishment or you can borrow through cash advance or payday loans.
Most people don’t understand the difference between cash advance and payday loans, especially in terms of how the loans need to be repaid.
- Payday loans: you can get an idea about the repayment terms of this type of loans, from its very name. it is expected that you should pay your debt by your next day which is why most companies like Cashfloat has a two week repayment period starting from the day you received the money from the lender. You will most likely have to provide the lender a post dated check for the borrowed amount and an additional lender’s fee. Given that the check doesn’t bounce when it is deposited, you can consider your loan cleared, You can get a two week extension on the loan for additional fee and higher interest rate, but electing to do that can cost you a lot of extra money in the long term.
- Cash advance: the repayment method for cash advance is quite different. Where companies like Cashfloat ask you for a check, with cash advance for sales based businesses, you need to promise a part of your future sales as a mode of repayment. So, if the lender has been promised 20% of each sale then when one of your customers pays you $1000 through credit card then the processing company will give you $800 and the lender will receive $200. If it were a business cash advance, then the lender gets to withdraw a pre decided amount from your business account, the frequency of those withdrawals depend completely on the lender.