Trying to figure out the difference between a cash advance and an installment loan can be daunting. And what is the difference between a payday loan and a cash loan anyway? Of course, if you try to Google these questions, you get a results page full of lenders trying to sell you their financial products. The definitions and explanations can be quite hard to locate amid the huge “Apply Now” buttons and the “Find out your Credit Score” flashing links.
Here is an easy to follow, clearly explained lexicon of the top personal finance terms with their definitions, without any “Apply Now”s and “Here’s Your Credit Score”s!
An application fee is a fee that is charged directly to the client simply for applying for a loan. iCash does not charge application fees and advises that you should be wary of financial lenders that do.
Bad credit is a term used to describe poor credit rating. Practices that commonly damage credit rating include late payments, exceeding your credit limits, declaring bankruptcy and defaulting on loans.
A cash advance loan is a loan, generally for a small amount of money, that will be repaid in a short time frame.
Cost of Borrowing:
This is a term used to describe the cost to you, the client, to borrow. The cost of borrowing is a fixed rate that is charged on the amount borrowed. The rate is determined by the loan authority of each province. At iCash, we adhere to the fixed cost of borrowing as regulated by each province. There are no hidden fees or other costs. iCash is a direct lender and won’t charge any brokerage fees on top of your loan.
The act of grouping all debt into one larger debt.
A direct lender is a lender available to a borrower directly, without intermediaries. iCash is an example of a direct lender. Meaning, iCash lends to you, the borrower, directly without selling your sharing your loan application to a third-party and without charging you brokerage fees.
Electronic Funds Transfer:
The transfer of funds from one bank account to another. iCash directly deposits your funds in your bank account by electronic funds transfer. Payments by electronic funds transfer are generally processed same day by the major financial institutions.
An installment loan is a loan in which equal, periodic repayments are made, depending on the established repayment schedule. Currently, iCash offers only payday loans but allows the flexibility to repay your payday loan in 3 equal installments. This allows more time to repay your payday loan and for the same cost of borrowing. If you calculate the annual percentage rate of your 3-repayment loan, you will find it is a better rate than repaying in only one payment.
A small, short term loan that is usually repaid on the borrower’s next paycheque. Payday loans in Canada are governed by provincial regulations.
The term of a loan is generally expressed in number of days. The maximum term for a payday loan is 62 days.
If there are any words that you feel would be of value to add to this lexicon or if there are words on your loan agreement that you do not understand, drop us a line and we will be more than happy to clarify for you!