When to Apply for Personal and Payday Loans?
A lot of people mostly think that personal and payday loans are just the same or to say the least, very similar. What you must know is that, each follows a different set of arrangement. Generally speaking, these payday loans are already secured to your next payday and available for short term basis. 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.
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. Well known and established lenders offer these loans to assist you on fixing your financial records.
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’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, 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 – personal loans most of the time are not requiring collateral for borrowers to be provided. However, some credit unions and banks might be requiring borrowers particularly those who have poor credit history to get a creditworthy cosigner. Payday loans however don’t require any collateral or cosigners in the process but there are payday loan lenders who might demand a list of references from the borrower together with their bank information and employment records.
There is the so-called title lenders in which the payday lender provides loans to people in exchange of their car or house title. 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. 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.