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An unsecured cash advance is a temporary loan that has no tangible backing behind it for collateral. Secured loans are backed by something tangible that can be sold, such as a vehicle or home.
When a lender allows someone to borrow money with no collateral they take the risk that that borrower will default on the loan and not be able to repay the money. Then the lender has nothing to seize and sell to recoup their money.
Unsecured loans are made by banks for their best customers who have good payment and credit records. Banks do not normally make the type of loans that can be found at a payday loan store or cash advance website. The main reason is the low loan amounts and the short turn-around time. A bank would not make enough money because they are restricted in the amount of interest they are allowed to charge on loans.
The payday loan industry is not under these same government regulations so they are allowed to charge higher fees that make offering unsecured loans profitable. Most people do repay their loans on time and the industry makes a solid profit. If the borrower cannot repay on time or at all the loan becomes a bounced check. Although the loan is unsecured, it is backed by a promise to pay on the due date from the bank account. This is the same as if a check was written and then the account had insufficient funds.
This is not a problem for most borrowers. Millions of people get unsecured cash advances every day from payday lenders and cash advance websites online. It is a very easy process, fast and convenient. An unsecured cash advance has saved the day for many people and they continue to enjoy this privilege routinely.
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