When to Apply for Personal and Payday Loans?
As a matter of fact, numerous people think that payday loans and personal loans are similar but it is far from reality. These two however are totally different structures. Generally, payday loans are secured on your next paycheck and short term. There are a lot of payday lenders who are eager providing this solution to their customers. You may be inclined in applying for such kind of loan but you ought to know that these come with bigger penalties and higher interests as well.
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. Reputable and well known lenders are offering both types of loans to assist you on your journey to fix your financial records.
Basically, there are many other things that made these loans are different from each.
Loan processing period – payday loans can be processed faster compared to personal loans which only needs a day or two weeks. 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 face the possibility of your phone service, electricity suspended or whatever reason and you don’t have the money to pay for it, payday loans are proven to be a good solution.
Repayment period – personal loans are offering varied repayment periods for customers from months, years to two years. By contrast, repayment period for payday loans can be as fast as a week however, payday loans have periods that could last to almost 2 weeks.
Co-signer or collateral required – in most cases, personal loans are not looking for any collateral on the part of the borrower. However, some credit unions and banks might be requiring borrowers particularly those who have poor credit history to get a creditworthy cosigner. While collateral or cosigners aren’t required in payday loans, there are some lenders that are requiring borrowers to show references alongside their bank information and employment records at the same time.
Title lenders are the kind of payday lender that is providing loans in exchange for the title of the car or house of the borrower. Although, the borrower still has ownership to their car or house but, the lender is going to keep the title until they have fully paid the borrowed money. The borrower is going to lose his or her asset in the event that they have failed to repay the amount loaned.