Cash advance, cash loan, payday loan — we’ve all heard these phrases at one point or another, but what exactly are these things? Sure, they’re loans, but what’s the difference between these and a car loan, a mortgage or a credit card? And why do people around the country seem to get these?

To start off, all of the terms are essentially used interchangeably. Cash advance is often just another way of saying payday loan (though it isn’t to be confused with the cash advance you may get on your credit card). A payday loan is loan of a small amount of money, compared to the value of other regularly taken out loans, with a fairly significant amount of interest. The recipient generally agrees to pay back the loan in a short amount of time, typically by the time their next paycheck is received from their employer (hence the name, payday loan).

What’s the difference between this a car loan, for example? Quite a bit actually. Though they’re both loans, these loans are much smaller. In addition to being smaller however, they also typically have a higher interest rate, as they are higher risk loans. Whereas a car loan is some fixed property you are working towards, and which you describe in your efforts to secure such a loan from a financial institution, there’s far fewer checks and balances when it comes to a payday loan. Generally, with major banking institutions, you’ll face a credit check.

With a payday loan, this simply isn’t the case quite often. This means that somebody that may not be eligible for a loan from an established bank, either due to his or her credit history or the lack of approval for the amount/purpose of the loan, may well be able to secure a payday loan.