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. In reality however, these two are completely different structures. 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. 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 – typically, payday loans are processed faster than personal loans which often requires days or two weeks at the most. 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.
Say for example that you face the probability of suspending your electricity or phone service or any urgent financial situation, then a payday loan can be a great solution for it.
Repayment period – there are different methods of payment for personal loans including 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 – 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. 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.