It’s hard to stomach… Your car broke down again. Your insurance didn’t cover your last medical bill. Your electric bill shot up after the heat wave. Plus, you won’t get your paycheck for another two weeks.
Unplanned expenses happen — and it’s not your fault. If you need relief, payday loans and cash advances are common solutions people turn to. Both help you cover short-term costs, but they work differently. Let’s walk through their differences and weigh the pros and cons of each.
A payday loan is an expensive loan that is due quickly, typically on your next payday. It lets you borrow money (generally $500 or less, but the maximum loan amount varies by state) you haven’t earned yet. That way, you have cash available when an emergency pops up, whether it’s car trouble, a hospital visit, or something else.
But the total yearly cost of taking out that loan (you’ll see this referred to as “annual percentage rate” or “APR”) can add up fast on top of other fees, with many payday lenders charging almost 400% APR.
A payday loan can also cause your bank to charge extra fees if your account doesn’t have enough money (known as overdraft fees), forcing you to borrow again to repay the last loan. That said, it should always be used as a last resort for financial emergencies.
A cash advance lets you access money you haven’t earned yet, whether from a credit card, your paycheck, or a cash advance app.
Here’s how each type works:
The costs and repayment schedules vary between types of cash advance. If you take out a cash advance, read the requirements carefully to make sure you won’t owe more than expected!
When money’s tight, cash advances and payday loans may both sound like great options. People often lump them together, but they’re not the same. Payday loans are a specific type of costly, short-term loan, while cash advances cover credit card or app-based advances.
Knowing the difference can help you avoid unrealistic payment plans, high interest rates, and more financial stress.
Payday loans are among the priciest borrowing options. For every $100 borrowed, you’ll pay about a $15 finance fee. That might not sound extreme, but factor in the short repayment window and how APR bundles both fees and interest into a yearly cost, and it adds up to roughly 400%. Borrow $500, and it could cost $575 to repay in just two weeks.
Cash advances are cheaper, especially through employer programs or apps like Klover. Employer advances may charge flat fees and APRs of around 100%, but many have little to no cost. Cash advance apps offer low or no fees and often zero interest.
A credit card cash advance carries about 30% APR plus a 3–5% transaction fee, making them a much more expensive cash advance option. To put things into perspective, a $500 credit card cash advance would cost roughly $531 to repay.
Payday loans typically require that you pay back the full amount (including fees) all on your next payday.
Cash advances are more flexible. Credit card advances let you make small payments over time, while employer-based advances automatically take money from your paycheck. Cash advance apps like Klover let you repay on your next paycheck or in multiple installments. The flexibility of cash advances can help you manage your short-term money needs without extra bank fees or adding on more debt.
Many assume payday loans are the fastest option, but that’s not always true. Lenders deposit these loans (averaging $500) into your account the next day. Cash advances tend to be smaller (e.g., Klover lets you access up to $250 before your next paycheck), but many lenders offer instant transfers, sometimes for free if you wait a day, making them just as fast as payday loans — or faster.
Payday loans are easy to access. You’ll need a valid ID, a bank account in decent standing, and proof of income. Most lenders don’t require a credit check.
Cash advance requirements vary. Credit card companies need an active credit line, and employer programs may require you to be employed for a length of time. App-based advances like Klover verify income rather than pulling a credit score.
The requirements matter because even if you have good credit, you may still struggle to access traditional loans. Options that consider income or employment instead of credit history typically grant faster, easier access to cash.
Potential impact on credit score
Payday loans rarely build positive credit — but they’ll still report missed payments, which can damage your credit score.
Credit card advances can lower your credit score if you owe a lot of money at once and don’t pay back quickly.
On the other hand, many employer- or app-based advances don’t affect your credit score, and only report problems if payments are seriously late. However, some cash advance apps like Klover don’t check credit scores at all — ever.
This matters because your credit score impacts your ability to access future loans, from mortgages to new credit cards. Choosing a low-risk borrowing option with minimal credit impact can help protect your ability to access loans later.
When an unexpected expense hits and that paycheck still isn’t here, you might wonder if a cash advance or payday loan is best for you. The choice is yours, but usually, a cash advance app will give you the greatest value when you consider risk, repayment terms, and accessibility.
If you only need a few bucks, know that payday loans only make sense in very specific situations:
Here’s a quick breakdown of both options:
With no credit check, no interest, and no late fees, Klover offers a safer, better option for your short-term cash needs. Find out more.
A payday loan might seem like the fastest, easiest way to cover a surprise expense, but due to the risk involved, these high-interest loans are best reserved as a last resort. Consider safer alternatives, like:
It’s normal to need a little financial help from time to time. Life throws curveballs — medical bills, car repairs, income gaps — that no one can fully plan for. If you find yourself leaning on payday loans or cash advances often, it may be a sign that your current financial setup isn’t giving you enough margin.
But you can change that.
Instead of asking only, “Should I get a payday loan or cash advance?” it can also help to ask, “What small steps could make things feel a little more manageable?”
Here are some practical ways to reduce the need for borrowing:
By taking small, consistent steps, you can rely less on costly loans and build more confidence in handling future expenses.
Needing a little financial help now and then is nothing to be ashamed of. The key is choosing the right option for your situation. Payday loans carry the greatest risks and are best to avoid whenever possible, while cash advance options vary in fees, repayment schedules, and borrowing limits that may or may not work for you.
The best choice depends on your circumstances, but with the right knowledge, you can steer clear of options that could land you in more debt.
For most short-term cash needs, Klover stands out as a low-risk, low-cost option. Our no-fee advances let you access cash quickly without the high costs or debt traps of payday loans and other alternatives.
Ready to gain control of your finances? Access cash safely today with Klover.
