There is often confusion about how cash advance loans work. Many people simply do not understand the difference between a cash advance loan and an ordinary loan and that does often lead to a lot of confusion. Are cash advance loans secured? How do you pay them back? What happens if you do not pay? There are so many questions which need answering before you even think of applying for a cash advance loan. So, if you are unsure about anything, read on to learn more and see exactly how cash advance loans work

Secured or Unsecured “That is The Question!”

Whilst cash advance loans are not really secured on anything, you could argue that they are kind of secured on your bank account.

When you mention secured, usually a secured loan is an amount of money which is leant to you and it is secured on your home. This means that if you miss payments on the loan, your home could be reposed by the loan company. An unsecured loan is usually a lesser amount of money compared to a secured loan and if you miss any repayments you will not really lose anything because it is not secured on anything.

Now, a cash advance loan is not secured on anything but you do need a bank account and you will also need to state when your next payday is. The loan is given to you on the basis that you pay the loan back on the day of your next payday. If you do not have a bank account you will not usually get a cash advance loan so in a way you could say that the loan is secured on your bank account.

What Happens if You Do Not Pay?

If you don’t pay your cash advance loan back on the date agreed then the payment will bounce and you will end up in serious trouble. You will land yourself in quite a lot of debt and considering the interest rate can be anything stupid up to 2000%, you really do not want to miss a payment on this type of loan! You will also need to pay your bank charges for the payment being sent back to you.

Overall a cash advance loan is not secured on anything and they lend you the money on the trust that they get your bank details and take the payment out automatically on the date stated.