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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. These two however are totally different structures. Payday loans are actually secured right on your next payday, hence the name. There are a lot of payday lenders who are eager providing this solution to their customers. However, such loans come with higher interest and bigger penalties than regular loans.
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. Well known and established lenders offer these loans to assist you on fixing your financial records.
There are several other things that set the two loans apart whether you believe it or not.
Loan processing period – if you need faster processing time, then it will be recommended that you opt for payday loans which can be processed within a day or at maximum of two weeks. 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, repayment period for the payday loans could be as quick as one week although, a lot of payday loans have periods that can last closer to 14 days.
Co-signer or collateral required – in most cases, personal loans are not looking for any collateral on the part of the borrower. However, some credit unions and banks might be requiring borrowers particularly those who have poor credit history to get a creditworthy cosigner. 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. Despite the fact the fact that the borrower has ownership to their house or car, the lender can still keep possession of it until they have paid the money borrowed in full. The borrower is going to lose his or her asset in the event that they have failed to repay the amount loaned.