Payday Loans VS Personal Loans

There several types of loans. Each one may differ from the other. It is an essential to know the options before applying and borrowing for an amount of money regardless of the amount. After all, it is borrowed money that is necessary to pay it back.

There are loan lenders that allow you to borrow the money over and over again. These are commonly known as the credit cards and lines of credit. It is called an open-ended type of loan. Say when you own a credit card, it allows you to make a purchase so long as it is within the credit limit. Every time a purchase is made, the credit available would also decrease. Meanwhile, close-ended loans are those that do not allow you to borrow any more amount of money the moment it is repaid. Mortgage loans, student loans and car loans are common examples of this type of loan.

Secured loans may allow you to borrow a certain amount of money provided that lenders will rely on your assets that would serve as collateral for the loan. In the event of a loan default, the lender may take any possession to cover the loaned amount of money. Compared to unsecured loans, it has a lower interest rate. In addition, you can appraise the asset before borrowing a secured loan. 

Now that we have learned the different types of loans, at this point, we should have an idea on which loans to avoid and which loans to use to meet the needs.

Personal Loans

These loans have a little difference with the payday loans. It is much like the traditional loan. Lenders require important documents and even assets as collateral for the money borrowed. In addition, as the application is sent, it will still take time before the loan is approved. Paying the borrowed money may offer payment options. These companies allow their customers to pay on a monthly, annual or whichever is convenient for the customer. There are even companies that allow you to repay in several years depending on the current income and debt. The amount of money allowed to be borrowed from a personal loan is much larger than a payday loan.

Payday Loans

This loan is also known as quick cash or fast solution in every financial need. Payday lenders online only require you to be of legal age (18 years old and above) and with a current income in order to borrow the money. Not to mention, a US bank account and an active checking account are also required before the loan is approved. 24 hours after, you will be able to receive the money. You can only borrow a limited amount of money in payday loans.

Before taking any move, consider on the pros and cons of applying for a loan. Loans may be able to meet any financial need, but keep in mind if whether or not you are capable to repaying. Look for a credible company and do not be deceived by their offers.