Personal Loans vs Payday Loans
Posted on Sunday, June 5th, 2011 at 10:05 am in Miscellaneous Cash Loan Info
Personal loans and payday loans help consumers in different financial situations. Payday loans are generally used for short-term emergencies, while personal loans are best suited for bigger, long-term financial needs. Knowing the differences between the two will help you decide when to use either service. Remember, only you know the state of your personal finances. Keep in mind what you earn each month and the kinds of expenses you have before you decide to borrow cash.
Payday Loans
Payday loans are short-term cash loans usually used for small emergencies between paychecks. These loans are ideal for the times when your car breaks down or you need minor dental work or routine medical care before payday but don’t have the cash available to cover it. You can borrow the cash you need now and pay back your lender on payday. Remember that payday loans come with extra fees and interest, so you’ll have to work these charges into the amount you’ll owe on your next payday. Borrow cash with fees in mind to make sure you’ll be able to repay your lender in full.
Payday loans are popular for small emergencies because they don’t require a credit check for approval and are usually approved quickly.
Personal Loans
Personal loans are for bigger or long-term expenses, like paying for a wedding, paying for hospital bills, making home renovations, or even making a downpayment on a house. Some banks have restrictions on how personal loans can be used, so double-check before you borrow cash. Other banks have loosened their restrictions in the economic recession and allow personal loans to be used for anything the customer needs. You may find that your local credit union offers greater flexibility and better interest rates than a bank does.
Since personal loans are designed for long-term use, they usually have payment plans lasting 24 months or more. You may be able to borrow up to $10,000 for a big expense depending on your bank or credit union.
Take a close look at your financial need before you decide to borrow from a bank, credit union, or payday lender. Keeping track of your finances will make you a responsible borrower and keep you out of long-term debt.
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