My wage is not high, and sometimes I need to borrow quickly some money till my payday. What is more preferable for me – a payday loan or a deposit advance? Both are short-term loans, but what is the difference between a deposit advance and a payday loan?
Two types of loans which are similar but easy to confuse are payday loans and deposit advances. Nevertheless, these are two different types of loans.
Here is what makes these two types of loans different from one another:
- Payday loans are offered by payday lenders, whereas deposit advances are offered by banks and credit unions.
- Anyone can apply for a payday loan. But generally speaking, bank customers with active accounts only can apply for deposit advances through a particular institution.
- The schedule by which payday loans and deposit advances are repaid differs as well.
Here is what deposit advances and payday loans have in common:
- Short-term in nature;
- High-interest rates and fees.
The Particularities of Payday Loans Vs. Deposit Advances
A payday loan is a loan that sould be paid off on your next payday. Terms can differ, but 2 to 4 weeks is typical.
You will be informed of the due date before you agree to the loan. The amount is being withdrawn directly from your bank account by the lender on that date.
Your agreement with a bank or credit union regarding when to pay back a deposit advance is different. The institution can take the amount out of your next deposit, no matter when that takes place.
Reviewed by: Casey Bond
Date Reviewed: August 28, 2019
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