Finding Similarities Between Lenders and Life
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. In reality however, these two are completely different structures. Generally, payday loans are secured on your next paycheck and short term. As a matter of fact, there are numerous payday lenders who are pleased to offer such service. 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. Reputable and well known lenders are offering both types of loans to assist you on your journey to fix your financial records.
As a matter of fact, there are other factors that set the two loan options apart.
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, 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. On the other hand, some credit unions as well as banks may need borrowers especially those who got bad credit history to find 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. 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. If they fail to make repayments of the amount, then that is when the borrower will lose his or her asset.