A Pawnshop Loan Versus A Cash Advance Loan

There are many ways to come up with cash rapidly in a difficult situation

. The two most popular quick fixes are getting a cash advance payday loan and using a pawnshop. Since neither one requires a credit check, these two methods are readily available to many people.

Cash Advance Loans

In order to receive a payday loan, the person must show proof of employment and earn a set minimum income each month, depending on the lender. The person must also produce some sort of legal identification and have a bank account. The transaction can be done at either a local payday cash loan storefront or through an online service.

The online cash advance is simpler for those who are short on time or have limited transportation. The whole transaction is completed from the applicant's computer and money is usually transferred within a day. Money is lent based on income, not on credit or collateral.

Local payday stores require an application visit and, if the loan is approved, the borrower needs to come back to sign more paperwork. They may pick up the money or have it deposited into a bank account. Whether online or in person, the loan must be paid back on the borrower's payday to avoid other fees.

Pawnshop Loans

A pawnshop loan is also a quick fix, but the borrower must have something of value to put up as collateral in order to get the loan. Most pawnshop loans are good for four months before the lender releases the merchandise the borrower brought in as collateral. If the loan is not repaid in full at this time, the merchandise is forfeited and put up for sale at the shop. The pawnshop loan normally does not require a credit check or proof of employment, but the amount lent on the collateral item is usually conservative to protect the pawnshop in case the money is not repaid.

Convenience

While neither a pawnshop nor a cash advance payday loan requires a credit check, both are made at a higher interest rate than a standard loan because it's easier for the borrower to be approved to receive the cash. If it's paid off as planned, this is a reasonable and convenient option.

Payday loans have a clear advantage, however. If the borrower can't pay back the money by the next payday, they can simply pay back the interest and receive an extension. This is helpful for someone who knows that the money is coming to them but simply has not arrived yet. Regular bills can be paid without hurting credit and the money can be paid off through the payday loan as soon as it becomes available.

by: Christine Harrell

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