Payday Loan vs. Wage Advance

February 1st, 2023

4 min read

There are a lot of options out there in the market If you’re looking for quick cash. But not all are the same, and it can be confusing to know what’s best for you. There are payday loans (or SACC loans), pay on demand and personal loans. It can pay to read the fine print, but it’s not always easy to find! Here we break down everything you need to know about cash advance vs payday loans to help you make the best choice for you.

How Payday Loans Works

Payday loans are formally known as SACC loans (Small Amount Credit Contract Loans). There are strict rules that limit how much payday loans can charge and how they operate. Unfortunately, the costs of payday loans can be incredibly high. Payday loans typically operate by receiving your application for a loan. You then make repayments according to their repayment schedule. You may be best by seeking to find an alternative to a payday loan.

How Pay-on-Demand Works

Using a pay on demand with Wagetap, you can receive money in your account in as little as a few minutes. Simply download the app, create an account, link your bank account and then you can instantly access your pay.

How Much Can You Borrow?

Both payday loans and wage advance have a maximum limit of $2,000. Although you can borrow much less than this - often as low as only $100 if you’re just looking for a small cash advance. But if you’re looking to borrow more than $2,000, it might be best to check out MACC loans (Medium Amount Credit Contract loans) or a personal loan with a payday loan alternative.

What are the Costs?

Wage advance charges differently from payday loans. It can pay to know the difference because the cost of payday loans can really add up quickly. To avoid very high costs from payday loans, you may be better to consider a wage advance.

Payday loans typically charge a 20% establishment fee. This means on a $500 loan, you’d be required to pay $100. Payday loans also charge a monthly fee of 4% of the amount borrowed, which is another $20 every month. Payday lenders also can also charge very hefty default fees. If you don’t make a repayment by the due date, you could be charged up to double the amount you borrowed - ouch!

Wage advance is different. You’ll pay a one off 5% flat fee, which is $25 on a $500 loan. Plus you’ll also pay interest of 24% p.a., which on a loan of two weeks works out to approximately $4.60. Wage advance can work out to be a much cheaper alternative to payday loans, so it makes sense to look around to consider your options.

What are the Repayment Terms?

Payday loans have repayment periods between 16 days and one year. Be careful - some payday lenders specify minimum repayment terms of up to 6 months to make sure you keep paying fees every month!

With a pay advance with Wagetap, your advance is due to be repaid on the date of your next payday. You also have options to delay your repayment to your next payday or another date that suits you. With Wagetap you can also split your repayment into smaller amounts and pay over multiple paydays. The best part is that these options are completely free!

What are the Eligibility Requirements?

Payday lenders and wage advance providers like Wagetap have different eligibility requirements. Both will require you to provide them with your bank account statements, usually via a digital application to make things easy. However, payday lenders will most likely also do a credit check to check your repayment history with other lenders and to check your credit score. This may adversely affect your credit score. Wagetap doesn't do credit checks, keeping your credit score secure.

Because the eligibility requirements are different, it can make sense to check your eligibility for a loan before you apply. You can learn more about Wagetap’s eligibility here or download the app now App Store Google Play to check how much you’re eligible for.

Which One is Right for Me?

It can be difficult to understand which products are best for you. You should understand the pros and cons of each and take into account your personal situation before you take out a payday loan or an alternative to a payday loan like Wagetap. Any loan you take will need to be repaid, so consider your options carefully.

What Customers are Saying

Wagetap has a 4.8 star rating and thousands of great reviews. Check out our app stores App Store Google Play to read through them to find out why we’re loved by over 150,000 people.

Download Our App to Get Started!

If you’re looking for a payday loan alternative, then a cash advance may be a better option. You can get access to up to $500 with Wagetap. Download the app to see if you’re eligible to get access to a pay advance today. Get started in only a few minutes by downloading now.

For additional help in improving your spending habits, you can always download Wagetap. It is a leading wage advance and bill split app that allows you to access your pay early. Emergencies can always happen and Wagetap can help you handle life's unexpected expenses.

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