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. These two however are totally different structures. Generally, payday loans are secured on your next paycheck and short term. The payday lenders are very eager to offer this solution to their customer’s financial woes. These loans however come with bigger penalties and higher interests.
With personal loans on the other hand, it offers bigger amount or in other words, it can used for more of your immediate financial problems and can be paid in installment for a certain period of time. If you want to fix your financial records, then it will be recommended that you talk to well known lenders in the industry that are offering these types of loans.
There are several other things that set the two loans apart whether you believe it or not.
Loan processing period – payday loans can be processed faster compared to personal loans which only needs a day or two weeks. Due to the reason that it usually takes minutes for payday loans to be processed and the money can be deposited on the next business day after approval, they are sought after by borrowers who are in emergency situations.
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 the payday loans could be as quick as one week although, a lot of payday loans have periods that can last closer to 14 days.
Co-signer or collateral required – personal loans most of the time are not requiring collateral for borrowers to be provided. As for some banks as well as credit unions however, they need borrowers to get first a creditworthy cosigner especially more so if they have bad credit record. 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. Despite the fact the fact that the borrower has ownership to their house or car, the lender can still keep possession of it until they have paid the money borrowed in full. If they fail to make repayments of the amount, then that is when the borrower will lose his or her asset.