There are some major differences between personal loans and cash advances such as credit checks, approval times and repayment periods. Even though they’re both short-term solutions for consumers, you’ll need to understand these differences to make an informed choice about which product is right for you.
Personal loan
Not all debt is bad. In fact, debt can be ‘good’. A home loan or investment loan are examples of good debt, as they’re helping you build wealth. Most of Australia’s personal debt is in the form of good debt. Whether it’s a personal loan or cash advance, if it’s helping you move forward, you could consider it a ‘good’ debt.
What’s a personal loan?
Personal loans are amounts of cash lent to you with no purpose or requirements attached. They’re usually paid off in installments over a specified period. Personal loans are usually unsecured loans and they tend to have shorter loan durations. However, if you borrow a larger amount, your loan term might be longer, such as three to 12 months.
How much can you borrow?
With a personal loan, you might be able to borrow up to, say, $2,500 or $3,000. Unlike mortgages or commercial loans, personal loans are designed for short-term, personal expenditure needs, so the loan amounts tend to be smaller.
How to obtain a personal loan
You’ll need to pass a credit check to obtain a personal loan. The lender will asses your ability to make repayments. This means they’ll look at your income. Along with an application form, you’ll likely need to submit supporting documentation like pay slips or Centrelink pension payments and a 90-day bank statement.
You’ll also need to be 18 years or older, be a permanent resident or citizen of Australia and be able to demonstrate at least three months of residency at your current address.
Can you get a personal loan with bad credit?
You’ll need to pass a credit check. But it shouldn’t be a problem if you’ve defaulted occasionally. You won’t be able to secure a personal loan if you have an undischarged bankruptcy or if you’re currently bound by a Part IX or X Debt Agreement.
What’s the approval time for a personal loan?
Technology has shortened the personal-loan approval process. While approval times can vary, if you work with a same-day lender, you could be approved and have the money in your bank account on the same day or the following day.
Cash advance
Cash advance loans are quite different to personal loans, and one major difference is they don’t require credit checks.
What is a cash advance?
Cash advance loans or payday cash advances are especially short-term loans that are repaid over a six-week (62-day) period. You might be issued with a prepaid credit card when you’re approved for the loan, and the card is reloaded with your loan amount. You can withdraw this amount at an ATM or use the card to pay for purchases.
How much can you borrow with a cash advance?
No fixed amount applies to cash advance loans and the amount you can borrow with a cash advance depends on your income.
How to get a cash advance
You need to be at least 18 years of age to apply, and you need to be able to demonstrate residence at the same address for at least three months. Additionally, you should be able to show continuous employment for three months or more or receive a Centrelink pension (proof of income with a 90-day bank statement).
Can you get a cash advance with bad credit?
The lender will check employment, identity, and your ability to repay the cash advance, but no credit check is required.
What’s the approval time for a cash advance?
Cash advance loans can be processed quickly, and you could have your cash advance deposited into your pay-day credit card within hours of approval.
Personal loans and cash advances are similar in the sense they’re short-term loans for smaller amounts, but they have important differences. Personal loans can be approved for repayment terms for up to 12 months while cash advance terms are usually less than 62 days. You can get a cash advance with no credit check, while personal loans require credit checks. These important differences might mean one product is more suitable for you than the other, depending on your current requirements.
SRG Finance offers cash advances, personal loans, secured loans, and prepaid VISA cards to help you get access to cash — fast. We can help you with lending solutions to bridge the gap between paydays and meet other needs. Contact us today to find out more about how we can help you get cash in a hurry.
