{"id":1046983,"date":"2024-10-29T17:05:45","date_gmt":"2024-10-29T21:05:45","guid":{"rendered":"https:\/\/www.finder.com\/ca\/?p=1046983"},"modified":"2026-04-22T09:36:05","modified_gmt":"2026-04-22T13:36:05","slug":"cash-advance-apps-vs-payday-loans","status":"publish","type":"post","link":"https:\/\/www.finder.com\/ca\/cash-advance-apps\/cash-advance-apps-vs-payday-loans","title":{"rendered":"Cash advance apps vs. payday loans"},"content":{"rendered":"

Need an influx of cash and can\u2019t wait for your paycheque to land in your account? It happens. Two options are cash advance apps and payday loans. You can typically get bigger loan amounts with payday loans, but it\u2019ll cost you. Cash advance apps are much cheaper, but you may pay a fee if you need money right away.<\/p>

Cash advance apps vs. payday loans<\/h3>
Feature<\/th>Cash advance apps<\/th>Payday loans<\/th><\/tr><\/thead>
Cost<\/strong><\/td>No interest, but you may pay a monthly fee<\/td>$14 for every $100 borrowed<\/td><\/tr>
Amount<\/strong><\/td>$20\u2013$750<\/td>$100\u2013$1,500<\/td><\/tr>
Term<\/strong><\/td>Next pay cycle or flexible<\/td>Up to $1,500 days<\/td><\/tr>
Basic eligibility<\/strong><\/td>Recurring income, bank account, good banking history<\/td>Recurring income, bank account<\/td><\/tr>
Credit check?<\/strong><\/td>No, there\u2019s no credit check<\/td>A soft credit check may be required (does not impact your credit score)<\/td><\/tr>
Collateral?<\/strong><\/td>No, this loan is unsecured<\/td>No, this loan is unsecured<\/td><\/tr>
Speed<\/strong><\/td>Instant approval and funding<\/td>Instant approval and funding<\/td><\/tr>
Application process<\/strong><\/td>Easy\u2014apply online or download the app, get an instant decision and get instant funding<\/td>Easy\u2014apply online or in-store, get an instant decision and instant funding<\/td><\/tr>
Pros<\/strong><\/td>
  • Non-employment income sources like government benefits are okay<\/li>
  • Apps available<\/li>
  • 24\/7 availability<\/li>
  • Quick and easy process<\/li>
  • Extendable deadlines<\/li>
  • No late fees<\/li><\/ul><\/td>
  • Accepts non-employment income<\/li>
  • 24\/7 availability<\/li>
  • Options to apply online or in-store<\/li>
  • Quick and easy<\/li>
  • High loan amounts<\/li><\/ul><\/td><\/tr>
Cons<\/strong><\/td>
  • Monthly subscription fee<\/li>
  • Potential extra fee for instant funding<\/li>
  • Small loan amounts<\/li><\/ul><\/td>
  • Extremely expensive<\/li>
  • Late fees and NSF fees<\/li>
  • Short loan terms that can\u2019t be extended<\/li><\/ul><\/td><\/tr>
Guaranteed approval?<\/strong><\/td>No, but requirements are very lenient<\/td>No, but requirements are very lenient<\/td><\/tr>
Avoid if<\/strong><\/td>You need large amounts or don\u2019t want to pay a monthly fee<\/td>There are alternatives or you\u2019re not sure the lender is legit<\/td><\/tr>
Learn more<\/strong><\/td>Cash advance apps<\/a><\/td>Payday loans<\/a><\/td><\/tr><\/tbody><\/table>

What is a cash advance app?<\/h3>

A cash advance app lets users access a portion of their earned wages before their regular payday, often with no interest and low or no fees.<\/p>

Once you have the app, enter basic details and link your bank account. After the provider verifies your information and deems you eligible (not a given), you can request an advance and have the money transferred.<\/p>

In most cases, cash advances require an active chequing account with direct deposit enabled. If you don\u2019t have direct deposit, you may not get a loan. Apps like KOHO allow cash advances without direct deposit<\/a>. But you\u2019ll need to meet other requirements.<\/p>

Borrowing limits vary by lender, but most max out at around $750. You may have to pay express transfer fees, a monthly subscription or membership fees that can range from $2 - $12 or more.<\/p>

What are the risks of cash advance apps?<\/h3>

A cash advance app typically doesn\u2019t charge interest or late fees. However, if you can\u2019t afford to wait a few days for the funds to transfer for free, you will be charged an instant transfer fee, which varies by lender.<\/p>

Fees can add up quickly if getting cash advances becomes a habit. So, between the advance itself, fast transfer fees, and any subscription fees, these no-interest loans can add up and potentially lead to a cycle of debt.<\/p>

What is a payday loan?<\/h3>

A payday loan is another way to get an advance on your paycheque, but the costs are significantly higher than with cash advance apps. For example, payday loan providers typically charge both interest and late fees. But lenders also don\u2019t require credit checks, and loan amounts can be higher than with cash advance apps\u2014up to $1,500.<\/p>

Payday lenders calculate interest by charging a flat fee per $100 borrowed. According to the Financial Consumer Agency of Canada (FCAC), lenders may charge $14 for every $100 borrowed. That may not seem like a lot, but it nearly equates to a whopping 365% APR for a two-week loan.<\/p>

Loan proceeds are typically deposited directly into your chequing account, but depending on the lender and your circumstances, you may receive the funds in cash. The loan is typically fully repaid on your next payday by having it automatically deducted from your bank account.<\/p>

What are the risks of payday loans?<\/h3>

The primary risk of a payday loan is the cycle of debt. Payday lenders require you to repay by your next payday. Once you do, you have less income left over to pay for other debts and living expenses. If you don\u2019t have enough money to get you through your next payday, you might be forced to take out another payday loan, and the cycle continues.<\/p>

Other risks include applying to an illegitimate lender, late payment and NSF fees if you don\u2019t repay, and getting denied by other kinds of lenders, such as banks or alternative lenders, if they see you have an active payday loan.<\/p>

Cash advance apps vs. payday loans<\/h3>

Cash advance apps and payday loans serve very similar functions, but there are some key differences.<\/p>

The similarities<\/h4>