When to Apply for Personal and Payday Loans?
Despite the fact that most people believe that personal and payday loans are the same, it is hardly similar. In reality however, these two are completely different structures. Generally speaking, these payday loans are already secured to your next payday and available for short term basis. The payday lenders are very eager to offer this solution to their customer’s financial woes. However, such loans come with higher interest and bigger penalties than regular loans.
Personal loans on the other hand are often for a bigger amount meaning, they can offer a solution to your immediate financial problems and paid in installment over a period of time. Well known and established lenders offer these loans to assist you on fixing your financial records.
As a matter of fact, there are other factors that set the two loan options apart.
Loan processing period – typically, payday loans are processed faster than personal loans which often requires days or two weeks at the most. Since payday loans are approved within minutes and that the loan is disbursed almost the next business day, they seem to be advantageous especially for borrowers who face urgent financial situation.
If you’re facing the possibility of having your phone service or electricity suspended the next day, then applying for a payday loan can provide a resolution to your problem.
Repayment period – there are different methods of payment for personal loans including months, years to two years. By contrast, the repayment period for a payday loan can last for only a week but some can extend to a maximum of 14 days.
Co-signer or collateral required – most of the time, personal loans don’t require the borrowers to provide collateral. However, some credit unions and banks might be requiring borrowers particularly those who have poor credit history to get a creditworthy cosigner. As for payday loans, they don’t need collateral or cosigners but some lenders may be demanding borrowers to show them list of references from the borrower along with their employment records as well as bank information.
There are also title lenders that you can find offering their service; this is basically a kind of lender who does provide loans but in exchange for the borrower’s car or house title. Even though the borrower has submitted the title of their asset, the lender still has possession of it until they get to pay the full amount. Now say for example that the borrower becomes irresponsible of making payments for their loan, they run the possibility of completely losing their prized possessions.