Qualification Criteria
Standard bank loans and credit union loans tend to be rather difficult to qualify for if you have anything less than a flawless financial history. Banks go to great lengths to check how you've paid on your other accounts in the past to determine your worthiness to borrow now. If you have missed a few payments or paid late on occasion, your chances of qualifying could be shot. On the other hand, pay day loans tend to have more flexible qualification criteria, although this will vary by lender. With most payday loans, the lender will be more concerned with your current income level and employment status than your financial history (varies by lender). Many more borrowers are accepted by pay day lenders than traditional lenders because of these somewhat relaxed standards (varies by lender). For specific information on pay day advance qualification criteria, speak with your individual lender.
Size and Loan Term
Pay day loans and typical bank loans also differ with regard to their size and the length of their terms. Pay day advances are intended to help the borrower pay for fairly small expenses, which is why they tend to be smaller on average than traditional loans. Traditional personal loans can also come in small denominations, but they also come in very large amounts. The typical payday loan is about $500, but the size of your loan will be influenced by your lender's rules and your monthly income (varies by lender). The terms of payday advances also tend to be briefer than those of bank loans. For example, a personal bank loan may have a term of six months or a year, while a pay day cash loan typically has a term of about two weeks (varies by lender).
Finance Charges
The APR (annual percentage rate) of pay day loans will almost always be larger than that of standard bank loans (varies by lender). Pay day advances have some of the most expensive finance charges of all loans because of the speed and convenience they offer. Bank lenders are less willing to take risks loaning to borrowers, so they provide their loans only to borrowers they are fairly certain will pay the loan back. Payday loan companies take much more of a risk, which is why their finance charges tend to be higher (varies by lender).