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Payday Loans Vs. Personal Loans
By Andrew Daigle
Personal and payday and have little in common with the exception of one thing. Like personal loans, payday must be repaid according to the terms of the agreement between you and the lender. If you're in need of a payday loan, it's very important to examine the differences and determine which would work best for your situation.
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're approved for a personal loan, you will be assigned an interest rate and monthly payment in accordance with the repay agreement. 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 an interest rate on the loan, payday lenders charge a set fee per every $100.00 borrowed, which
typically ranges from $10.00 to $30.00. On a $1,000.00 loan, you could end up paying an additional $100.00 to $300.00 in fees. This means that payday are more expensive than traditional loans, but they offer fast cash for those who need it. Payday are issued within 24 hours of the application in most cases.
If you are trying to decide between payday and personal loans, one of the greatest factors to consider is how much money you need to borrow. Payday typically do not exceed $1,500.00, whereas personal can be much higher. If you need quick cash, payday 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 for emergency reasons.
The information contained in this article is designed to be used for reference purposes only. It should not be used in place of or in conjunction with professional financial advice relating to the personal or payday loans. In addition, this article is not to be used as a recommendation for any type of loan or other similar process. Check with a lender who specializes in these types of for additional information on payday or personal loans.
Andrew Daigle is the owner of many informational websites including information for Payday Loans, Personal Loans, Student Loans and Auto Loans, and Affordable Auto Insurance Quotes for finding the best auto insurance in your state.
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