Payday Loans / Cash Advance

by UnidosJanuary 29, 2020

If you’re in need of some fast cash, you may be considering a variety of options, like a cash advance or payday loan.

These products are very similar—they’re short-term loans with high interest rates that provide you with access to quick money, usually between $100-$1,000. But there are a few notable differences between the two.

Let’s take a look:

  • A cash advance is a cash loan taken out through your credit card with the amount being a percentage of your credit limit.
  • A payday loan requires applying with a lender and getting approved for the loan.

Payday loans are designed to be paid back on a specific timeframe, unlike a cash advance which allows you to carry the debt longer-term. A payday loan or cash advance can also be called a salary loan, payday advance, a short term loan, or a small dollar loan.

How it works

You can get a payday loan online or at a payday loan branch.

All you need to provide is identification and proof of income, like a pay stub. Most lenders will also require your bank details so they can make automatic withdrawals when it comes time for you to pay.

First you apply for the loan and, if approved, you’ll receive cash, a check, or the money deposited into your bank account almost immediately.

It’s called a payday loan for a reason—because you’re expected to pay the loan back (including interest) by your next payday or within two weeks the balance of the loan.

Should I get one?

Payday loans charge very high interest rates, they can ruin your credit if you don’t pay the debt back on time, and they often have hidden fees—all of which could lead to a cycle of debt.

In short, payday loans should only be used as a last resort for: (1) covering unavoidable expenses, (2) when you need to get money fast, and (3) when you can only meet the loosest credit requirements. Make sure you read the fine print of potential lenders and understand what you’re getting into.

If you feel comfortable with the terms and price they’re charging you, then we understand that sometimes it’s the only option.

High Interest and high fees?

While a cash advance or payday loan can put money in your pocket quicker than other loan alternatives, like personal loans, you need to be careful. These types of loans are notorious for having hidden fees and extremely high interest rates, which can be between 300%-3000% and hidden fees.

For example, the average APR on payday loans is almost 400% so if you take out a $500 payday loan, you’ll owe about $575 two weeks later. However, the loan cycle may not stop there if you, as many payday loan borrowers do, “roll over” the loan multiple times. Do that for just three months and the amount due is over $1,000.

The interest may be just the beginning because many lenders add hidden fees like application fees, missed or late payment fees, customer service fees, and overdraft fees. So, always ask your lender or read the loan terms on your loan to find out about any potential fees.

Can't Pay?

If you don’t have the money to pay back what you owe, the payday loan lender will still attempt to withdraw money from your bank account which may result in overdraft fees. Be very careful with this because you may end up paying hundreds of dollars to a bank for an overdraft fee on top of the interest and fees that you have to pay to the lender.

If you didn’t pay the lender back, they’ll eventually sell your debt to a debt collector agency who can sue you, even if your debt is just a small amount. The collector will do this to try to get some amount of payment from you. This process is called collections and while it is a highly regulated industry, it can be very intimidating to see these notices.


Before taking out a payday loan, take a moment to consider the other options: is expense unavoidable? Can it be delayed even by a few days to obtain a personal loan? Can you ask for assistance from others?

If a bank or credit union can’t get you the money you need in time or if you’re having trouble getting approved, there are multiple online lenders with looser requirements which are still better than many payday lenders.

Another option is to request an advance from your employer, particularly if you are working for a smaller company. You can only do this once or twice but you will avoid paying predatory fees.


Payday loans have a pretty bad reputation in the lending world, but they can be a lifeline in times of need. We at Unidos understand that times can be hard and life happens, requiring quick access to money.

So, if money is tight, you need cash, and don’t have a lot of options, then don’t be afraid to get a payday loan. There’s nothing wrong with them so long as you have a full understanding of all the costs and consequences for not repaying the debt.

Do you have more questions about payday loans? Do you want to share a good or bad experience with us? We love to hear from our friends, feel free to contact us at