When it comes to payday loans and personal loans, the two
have very little in common with the exception of one thing.
Like personal loans, payday loans must be repaid according
to the terms of the agreement between you and the lender.
If you are in need of a loan, it's important to examine the
differences and determine which will work best for your
individual needs.
A personal loan is very much like any other traditional
loan. When you apply, you will be required to submit
information relating to your income and the lender will
review your credit report to determine your eligibility.
If you are approved for a personal loan, which are
generally issued as unsecured loans, you will be assigned
an interest rate and monthly payment in accordance with the
agreement to repay. In most cases, a personal loan is
designed to be repaid within several years and in order to
be approved for a personal loan, the lender will determine
how much you can afford based on your current income and
debts.
A payday loan, as the name implies, is designed as an
advance on your next paycheck. In order to qualify, you
must be 18 years of age or older and the only things that
you need are a bank account and a job with steady income.
Self-employed individuals are not generally eligible for
payday loans. Because most payday lenders do not access a
credit report, your credit history or lack thereof will not
be a determining factor in your eligibility to receive a
payday loan. Instead of charging interest rates on the
loan, payday lenders charge a set fee per $100.00 borrowed,
which typically ranges from $10.00 to $30.00. On a
$1,000.00 loan, for example, you could end up paying an
additional $100.00 to $300.00 in fees. This means that
payday loans are more expensive than traditional loans, but
they offer fast cash for those who need it. In most cases,
payday loans are issued within 24 hours of the application.
If you are trying to decide between payday loans and
personal loans, one of the greatest factors to consider is
how much money you need to borrow. Payday loans typically
do not exceed $1,500.00, whereas personal loans can be much
higher. If you need quick cash, payday loans can offer it,
but the rates are much higher than with unsecured personal
loans. If you have a limited or poor credit history, you
may find it difficult to find approval for a personal loan.
In some cases, lenders will issue bad credit personal
loans, but the interest rates will be somewhat higher. If
a traditional loan is simply not feasible, a payday loan
may be the only answer. In general, people typically apply
for payday loans for emergency reasons.
The information contained in this article is designed to be
used for reference purposes only. It should not be used
as, in place of or in conjunction with professional
financial advice relating to the payday loans or personal
loans. In addition, this article is not to be used as a
recommendation for any type of loan or other similar
process. For additional information on payday loans or
personal loans, check with a lender who specializes in
these types of loans.
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Andrew Daigle is an author and creator of many
informational websites including
http://www.personal-payday-student-loans.com for different
types of loans and
http://www.auto-insurance-quotes-cheap.com for the cheapest
auto insurance, and many more.
