Both payday loans and personal loans are suitable for different purposes. It is not about which loan is better than the other one. It is more about which loan works best for your situation. In some situations getting a payday loan can be better, whereas personal loans can be better for other times. You should know about the basics of both of these loans to decide which one would work best for you. Here are a few grounds that you should consider before choosing your loan. You can always get a loan from personalandpaydayloansonline.com online at any time.
How much money do you need?
You need to have an accurate or at least a near accurate sum of money in your mind before you apply for any loan. If you need a higher amount of money, then it is better to go for a personal loan as the loan amount for personal loans can range anywhere between $100 to $100,000. If you only need a small amount of money, you can go for payday loans.
You should keep the repayment in mind while applying for a loan. If you take a larger sum of money through a payday loan, remember that you’d also need to pay it back in a shorter time frame. Before borrowing the money, from any kind of loan, be absolutely sure that you would be able to pay it back in time.
How is your credit score?
Your credit score is absolutely crucial when applying for a personal loan. Since most personal loans don’t ask for collateral, the credit score is what helps the bank in deciding whether a person is eligible for the loan or not. So it is a good idea to check your credit scores before you apply for a loan.
If your credit score is low due to any reason, the chances of your personal loan being passed would be very little. You should talk to the loan officer or lender to see whether you can get a personal loan with your credit score. However, in case your credit score is low, you can still apply for a payday loan. Payday loans don’t ask borrowers for their credit score or any collateral. You only need to provide identification proof and basic details about your income and employment.
How urgently do you need the money?
If you need the loan amount very urgently, that is, within 24 hours, then personal loans might not be the thing for you. Even though the processing time of personal loans is shorter compared to other traditional loans, it still takes more than twenty-four hours in most cases. Of course, you can find a lender who might be willing to give you a personal loan within 24 hours, but it might be a little difficult.
So in cases where you need the money urgently, you should go for payday loans. Once you complete the online application process, which doesn’t take more than ten minutes, you will be able to see the loan amount reflected in your account within a couple of hours. Since payday loans are primarily meant for emergency financial situations, the processing time is minimal.
Do you want to pay back the amount within a few days or over a few months?
Payday loans, by definition, mean that the borrowed amount of money will be repaid to the lender on the next payday of the borrower. You might get lenders who give you a couple of months to pay back the loan amount, but the period of repayment would not extend beyond four to six months. Payday loans are short-term loans. So if you want to repay the borrowed amount quickly and get done with it, then payday loans can be a better option for you.
Personal loans can be considered long-term loans. The loan amount needs to be paid back within a few months to a few years. The period by which you need to pay back the money will be mentioned in the agreement that you sign while receiving the loan. So if you want to pay a little amount each month and you don’t mind paying back the money over a long period of time, then personal loans can be better for you.
Why are you taking the loan?
The purpose for which you are borrowing the money should be a major consideration when choosing between a personal loan and a payday loan. If you are in an emergency situation, for example, a medical emergency, a house repair emergency, a funeral, or an immediate fee payment then you should go for a payday loan. All these situations do not require a very large sum of money and you can pay them back within a few months very easily. Moreover, the processing is quicker.
But if you are considering taking a loan for buying something expensive, going on a vacation, or consolidating your debt, then you should go for a personal loan. It is not advisable to get a payday loan for luxurious purposes. Even if you take a personal loan to spend on anything luxurious or to go for a vacation, make sure that you can repay the amount on time. Keep in mind that a delay in the repayment of personal loans can negatively affect your credit scores. A lower credit score would mean a higher interest rate. You might not get another personal loan if your credit score drops.
These are the few basic things that you should consider before deciding which loan type would be better for you. No matter which loan type you choose, it is very important to look at at least a couple of lenders before deciding on one. All lenders have a different interest rate and different terms and conditions for offering a loan. Make sure that you find the lender that suits your needs perfectly. Never skip reading the terms and conditions, or the agreement before accepting the loan. Remember that you can always deny a loan at one place and go to another place if you aren’t okay with the terms and conditions of the loan.