The amount of financial aid varies. A personal loan can be as much as $10,000 or $50,000. A payday loan usually does not exceed $500. There is also a difference in terms of repayment, credit terms, and interest. Therefore, let's understand how do payday loans differ from other types of loans and which financial assistance is better to issue.
What are the differences between a personal loan and a payday loan?
First, it is worth saying that the payday loan meaning can be anything. You can spend money on all your needs. The main thing is to return the financial assistance on time and in full. In principle, this is where similar moments end.
The main differences between an installment loan vs payday loan are:
We talked about the amount of financial assistance at the very beginning. Customers with good credit can get up to $100,000.
The terms of a personal loan can reach several years. It is typically issued for 3-7 years. The maximum time it takes to repay a payday loan is four weeks.
A payday personal loan not require credit checks. On the one hand, this is good. But here, it is worth mentioning the high percentages of financial assistance. They can reach 400% per annum. At the same time, the personal loan rate ranges from 6% to 36%.
What other differences are there?
In addition to the above points, there are other differences. You need to contact a bank or other financial company to take out a personal loan. You need to contact the company and pass a background check. After that, it is necessary to submit documents and undergo an inspection. And only after signing the contract will you receive the required amount.
You should know that a payday loan is a type of financial assistance. To get it, you need to contact a payday lender. It can be done both online and in the branch. It is important to compare payday loans to choose the correct option. Furthermore, it would help if you also determined whether is a payday loan secured or unsecured. Specialists will not study the rating in detail; they will only ask for the account number.
There are peculiarities in repaid debt. A personal loan is repaid every month in fixed installments. The payday loan will have to be returned immediately.
What you need to know about a personal loan
The lender provides you with a certain amount for a specified period. You must return the money with payments every month. It is a personal loan. Usually, no collateral is required to receive funds. The company thoroughly studies the credit rating and income level. It gives confidence in your ability to repay the total amount of the loan.
The main advantages of a personal loan are:
possibility to gradually close the debt;
there is no risk of losing the car or assets when taking out a loan without collateral;
funds can be spent on any needs.
If you have bad credit, you can put down a security deposit. It will significantly increase the probability of a favorable decision.
But do not forget about the risks of financial assistance. Do not take out a loan for a significant amount. For this, it is necessary to assess the real need and how much money is needed. It is worth remembering that the amount of payments depends on the interest. And the more significant the loan body, the more you will have to pay.
For the same reason, you shouldn't borrow more than you can pay back. If it is a secured loan, there is a risk of losing property. You should also study the rules of debt repayment. There are proposals in which interest is charged for the early deposit of funds.
What is a payday loan?
You can take a small amount of money from the lender and pay it back with the next advance. It is a payday loan. Whether it is a payday loan secured or unsecured debt, it is expensive financial assistance. The commission can be from 10 to 30 dollars for every 100 dollars of credit.
The main advantage of a payday loan is the absence of checks. The lender doesn't care if you have outstanding debts or if you make your payments on time. It is ideal if you have bad credit and need money urgently.
But the stakes are also exceptionally high. First, these are high-interest rates. If you continue lending, you can charge up to 400% per year. Plus, short payment terms. Thus, you may not always have time to return the funds and will have to take out a loan for payment.
Whether are payday loans secured or unsecured, funds may be debited from the account if payment is delayed. If you do not repay the debt, the creditor has the right to go to court.