In this life, money just comes and goes. Sometimes, we feel that we barely have money. Once the D-day arrives, we divide the cash we get for paying monthly bills and buying important things. However, there are times when our budget is not enough. So, we usually go to our relatives or friends and ask them if they could lend us some cash.
They may give the amount that you ask for, but sometimes, they don’t. The reason is that these people have allotted their money for their needs too. In times like this, you need to visit a finance company. These agencies help those who are in need of cash. You just need to make a request and wait for their approval.
There are different types of financial assistances that you may get. It all depends on how you want to spend it. Nonetheless, the most common choices nowadays are payday loans and merchant cash advances.
Many people think that these two financial solutions are the same. It could be because of their purposes and process. You can use these funds in emergency situations. Furthermore, the procedure of getting the cash is quick. You can either get them online or via land-based finance firms.
However, they are clearly different from each other. In this post, you will learn what you need to know about these two financial aids. You will also learn what makes them different from one another. Hence, we will not keep you waiting any longer. Let’s begin the discussion!
What You Need to Know About Payday Loans
Payday loans are loans that you can get when your budget suddenly cuts short. There are many reasons why people experience this scenario. It could be because of unexpected expenses, such as hospital bills, car repairs, etc. With this loan, you can pay them all without a problem. Hence, it’s your life-saver when these situations occur.
So how does it work? As the name suggests, it’s a loan that stretches to your next payday. The provider lends you some cash by depositing it into your bank account. Once deposited, you can withdraw the funds in any ATM outlet.
However, payday lenders don’t just give the money to you because you ask for it. Obviously, you need to apply for this loan. There are two ways of requesting for a payday loan. You can apply online or visit a payday lending company in your area.
When applying for a loan, you need to submit an application form, along with proof of citizenship, birth certificate, etc. You also need to give your bank account information and proof of employment. After preparing these documents, you can now give them to the representatives.
The lending company will now analyze the papers you’ve given. They will start doing a background check. They will give your employer a call to check if you’re working with them. Once done, the representative will give you an answer regarding the application.
If they approved your request, they send you a contract agreement. Read it before signing them. If you agreed to their conditions, you need to sign the papers and send it back to them. After 24 hours, they will deposit the borrowed money to your bank account.
There are several reasons why you should get a payday loan. For one, the entire process is fast. Before the weekends, the lent money is in your hands. It only takes one to two days to complete the process.
Another reason is the absence of credit history. Though it’s a type of credit, it doesn’t need your credit score. Lenders base their decision on your salary and your work. If they think you can pay them on time, they will approve your application.
Lastly, there’s no collateral at stake. Hence, you don’t need to put your property at risk. You can still have your car or your home, even if you’ve missed the deadline.
However, the moment you missed the date of payment, your credit will increase. For this reason, Congress is pushing these firms to be illegal. They feel like payday loan companies don’t help those who are facing financial problems. Instead, they are pulling them down into the mud.
Thus, you need to be careful of these firms. Ensure you do your research before applying. Read some reviews to know what people have to say about a particular company. Likewise, you need to look for their policies. Know what’s in their contract before making a loan request. If you don’t like the policy, you can move onto the next lender.
If you do these things, you will surely find a payday loan provider that you can trust.
Things You Need to Know About a Merchant Cash Advance
Now you know what a payday loan is; it’s time to discuss the merchant cash advances. As the name indicates, these are cash advances for businesses. Their aim is to help entrepreneurs who are in need of quick cash.
However, this is not a loan, though it may seem like it is. It’s because merchant cash advance loan providers don’t lend you money. Instead, they let you buy your future sales. These funds will help you buy new equipment or expand your business.
So the question is, how does it work? It works once you get the money. The business cash advance company will give you a machine that you need to put up in your store. This equipment will serve as your credit card processor. Once the cashier swipes the card, the company automatically gets a portion of your sales. This process continues until the last day of payment. Hence, you don’t need to worry about the increased interest rates if you fail to pay them.
Despite this advantage, many entrepreneurs are still hesitant to get a cash advance. It’s because of the misconceptions regarding this service. However, there are numerous benefits that you can get out of this financial assistance.
For one, it’s not expensive. Contrary to what people believe, business cash advance loans are cheap. Yes, they implement a factoring system. However, the additional rate remains the same, even if you’ve missed the deadline.
Another benefit is you get to pay your credits on time. Since the providers are the ones who get the payment, you don’t need to remind yourself of the due date. You’ll be surprised when they tell you that you managed to pay them without a problem.
Lastly, they are flexible. Business cash advance lenders don’t take an exact amount every day. They base it on your daily revenues. So if you only made a small profit today, they only get a little portion of your sales. Conversely, if you made bigger sales, they take larger shares out of it.
However, you will only get these perks if you hire a reliable finance company. Thus, make sure you read merchant cash advance loan provider reviews before making a decision.
Is There Any Difference?
Merchant cash advances and payday loans have similarities. However, they also have differences. One is the people they serve. MCAs are for those who own a business. They help merchants whose budget is cut short. Payday loans – on the other hand – are for employees. It gives financial assistance for those who cannot wait for the next payday.
As for the process period, merchant cash advances take longer than payday loans. MCAs take seven days to finish the entire process. Yes, it’s quite long for a short-term loan. Nonetheless, it’s still shorter than business loans.
As for payday loans; it only takes one to three days to complete the whole procedure. Hence, you’ll be able to pay your bills on time.
Lastly, MCAs don’t have interest rates while payday loans have it. With MCAs, you only need to pay the amount you agreed. For payday loans, your credit increases if you fail to meet the deadline. Hence, make sure you pay your debts on time to avoid the dreadful increase in interest rate.
Now you know their differences; it’s time to make the right choice. When making a decision, you need to consider who you are. If you’re a business owner, then you should choose the merchant cash advance. If you’re a worker, then the best choice is payday loans.
You also need to consider the amount you want to borrow. If you need more than $50,000, then MCA is the right choice. If you need less than that, then a payday loan is the one that you need.
Lastly, you need to determine how you will use the funds. MCA is a perfect choice if you want to improve your service or expand your business. Payday loans are ideal for paying unexpected expenses. For example, you can use it for hospital bills, car repairs, etc.
However, there’s one thing that you must remember before getting these funds. Whether you’re going for a merchant cash advance or a payday loan, make sure you don’t overuse it. Otherwise, they will drag you down to a pitfall.
Get the best merchant cash advance loan providers today! Go to CrowdReviews.com and read their reviews of merchant cash advance companies.
Jeev Trika
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