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. Payday loans are actually secured right on your next payday, hence the name. There are a lot of payday lenders who are eager providing this solution to their customers. 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. Reputable and well known lenders are offering both types of loans to assist you on your journey to fix your financial records.
There are several other things that set the two loans apart whether you believe it or not.
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 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 – there are different methods of payment for personal loans including 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 – in most cases, personal loans are not looking for any collateral on the part of the borrower. 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. 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. 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.