When you need to borrow money for whatever reason, it is important to weigh your loan options so you can make the best possible decision. Payday loans have increased in popularity quite a bit over the years, and there are many reasons for this trend. Fewer and fewer people are even bothering to apply for personal loans because of how difficult they can be for the average person to get. Those who take enough time to get this information should be able to choose the borrowing option that will benefit them the most.
What Are Payday Loans?
These loans are given out to qualifying individuals as a sort of advance on their pay checks. These short-term loans must usually be repaid within a period of two weeks. You can only get one of these loans from a private lender.
Personal loans are given out by banks, and the repayment period depends on the amount that you borrow. Usually a personal loan is for a larger amount, so you will have more time to pay it back. Both of these types of loans will allow you to get the money you need, but there are many differences that you should be aware of.
Some people think that payday loans are inferior to personal loans just because private lenders give them out, but this is not the case. The truth is that there are lots of trustworthy private companies in the payday loan industry that you can rely on to help you out financially. It is a good idea to spend some time looking over your lender options though, as there are many of them to choose from.
Personal loans are given out by banks, which are notorious for making it difficult for the average person to get approved. There are many banks that you can get your loan from, but doing so is much more complicated and frustrating overall.
Requirements and Standards
These days a lot of people all across the United Kingdom are gravitating towards payday loans because they are very easy for most people to get.
Some of the more basic requirements needed to get a payday loan include:
- Over 18 years of age
- Current/active checking account
- Adequate income
- Legal UK citizen
The banks that give out personal loans tend to have much higher standards. Bad credit is not really a big problem if you are applying for payday loans, but you’d be hard pressed to get a personal loan with a low credit rating. In fact, it is nearly impossible to get an unsecured personal loan from a bank if you don’t have at least good credit.
You will quickly find that a lot of the private companies that give out payday loans don’t even run credit checks, so your low score shouldn’t stop you from getting approved. Millions of people all over the UK get turned down personal loans each year because their credit wasn’t good enough. The fact is that the requirements for getting payday loans are much more lax than with a bank, so you will need to keep that in mind.
Time it Takes to Receive Funds
It is not unusual for someone who gets a personal loan to wait 2-3 weeks before they finally receive the money they need. People who apply and get the green light for payday loans can get their funds within less than a full business day. If you find yourself in a situation where you need money fast, you should definitely avoid getting a personal loan altogether.
Loans that are given out by banks tend to take a very long time to go through, which is just another reason that more people are going through private lenders for the money they need. Most people get funds from payday loans within a matter of hours after submitting an application online, which is great if you in an emergency situation financially.
Process for Getting the Loan
While the basic process for getting a personal and payday loans is basically the same, there are still some differences that matter quite a bit. If you want to get a payday loan, all you need to do is simply go online, find a lender, and fill out an application on their website. Many banks today still require you to come down in person to fill out a paper application, which can be frustrating.
If you want to save yourself quite a bit of time and effort, it is a good idea to look into payday loans because of how easy and convenient the whole process is. One thing that a lot of people don’t like about going through a bank to get a loan is that they demand to know what applicants want the money for. Those who get a payday loan never have to answer any such question, so it’s entirely up to you how to spend the money you borrow.
Repaying Your Loan
Payday loans are typically repaid over a much shorter period of time than personal loans, but it’s only because the borrowing limit is usually less. When you don’t have a lot of time to pay back your loan, you will actually increase your chances of paying it back on time. The longer the loan term is, the more interest you will end up paying. A lot of people think that the more time you have to pay off a loan the better, but this isn’t always the case.
Which Type of Loan is Right for You?
When you are trying to decide between a personal loan and payday loan, you will need to take a close look at your own situation. If you need money right away and cannot afford to go through a lengthy and involved process, a cash advance is probably the way to go. If you do not have very good credit, payday loans are definitely the better option.