Cash loan and payday loan – what are the similarities and differences?

Cash loan and loan are not identical concepts. They divide them more than they connect. You can try to identify similarities at the general level.

However, clue is in the details. These are two different financial products, granted on different principles, by different institutions and based on different legal regulations.


Similarities between cash loans and payday loans?


Both of these financial products give you access to cash that we don’t currently have. In both cases the cash must be returned. When borrowing small amounts, there is no need to indicate the purpose for which the money is borrowed.

Both of these forms are subject to legal regulations, but the rules for granting credit are set out in the Banking Act, while the provisions of Civil Law apply to loans.


However, more differences

That’s it when it comes to similarities. It is more important to realize the differences, because it is on their basis that we can make an informed choice.

It is worth paying attention to those aspects that are the most practical and, from the borrower’s point of view, decisive. Therefore, we will compare 4 areas: costs, formalities, time, resources available.


Credit costs and payday loans

Credit costs and payday loans

Each cash loan is charged with costs. The loan price includes fees, commissions, interest and often also insurance costs. However, the loan does not have to be charged. This applies to cases when we decide on a short-term loan and this is the first loan in a particular company. Each of the loan companies individually regulates the cost of granting the loan. They should always be clearly defined – already during the initial calculation of repayment obligations.

This is the area where the differences are most felt. We incur a rather detailed verification process when we incur a financial liability at the bank. The following will be checked: size of the household, value of existing financial liabilities, source of income and their amount. The bank will also verify our creditworthiness at the Credit Information Bureau.

In the case of payday loans, the procedure is much simpler. All we need to get a loan is an ID card and, in some cases, a bank account.



Of course, all the activities leading to receiving cash are ongoing. The more complicated the process is and the more formalities we have to complete, the longer it will take to wait for the money. Since most loan companies reduce these formalities to a minimum, the time in which the money will be on our account is very short. It can be up to 15 minutes. It may or may not. The time of payment posting is the most important here. If we have an account with the same bank as the lender, the money will be available very quickly.


Available funds


How much can we borrow at the bank and how much at the loan company? The payday loans are by definition ‘low-value’ loans in the range of $ 1,000 – 5,000. In the case of a bank loan, the upper limit of its value is determined by the individual creditworthiness.