Under the term of personal loan is understood the amount of cash given to a person for his or her needs for a period of time under the interest.They differ from payday loans and car title loans in the terms of borrowing.
- Personal loans can be secured and unsecured and are generally given for a longer period than payday loans.
- Besides, personal loans are mostly provided by banks and under very strict conditions; while payday loans are easier to get.
Generally, the type of a loan depends on what a person needs the money for.
Personal loans refer to small loans in the majority of cases. Unlike mortgages, they are given for shorter periods of time; however, they are longer in term than payday loans. They can be repaid often within a year and some of them during several years.
- Personal loans are harder to get than payday loans when a person has got problems with credit history.
It is essential for a bank that a person was creditworthy and his credit score was good in order to consider him or her approved for a loan. The whole thing is different with payday loans as they are easier to get and there are no such strict requirements there. Payday lenders are far more lenient to their customers and are ready to offer their services to a wider range of people without regards to their credit history.
- Personal loans are different and they also vary according to their purpose and terms of repayment.
Unsecured personal loans are more expensive than secured ones in terms of repayment and interest rates as they do not require any collateral. With secured loans a person can pledge something as collateral against the loan and get it cheaper and on more beneficial terms. Lenders are more favorable about borrowers with assets as they are considered more reliable in terms of creditworthiness. However, payday loans may be more convenient for people with immediate need of cash. They are faster to get but they are also more expensive when it comes to interest rates.
Short Term Loans
Short term personal loans are available to borrowers with a bank account. These loans can be applied online and acquired within the period of a business day.
- There are loans up to $1,500 and they are given for a period of 2 weeks on average and generally till the next payday and against a next person’s paycheck.
Such loans are frequently known as payday loans and they are beneficial for people with poor credit history. Short term personal loan lenders do not perform any credit checks and they are in general are more lenient to their clients. This make such type of lending very attractive option for a great many borrowers.
- When it comes to greater loans such as personal installment loans, they are up to $2,500 and are generally taken for different purposes.
With some lenders they can also be obtained within very short period of time. However, one should take into consideration that the rates will be also very high as with payday loans due to the fact that this is also a type of unsecured lending and no credit checks are involved.
- Loans up to $25,000 are issued for people in need of money for such purposes as car and house purchases and the like.
They can be secured and unsecured and they have already been mentioned here. The former presuppose collateral to be pledged against the loan and they are also known for having cheaper interest rates than the latter. Those do not require any asset to secure a loan and, therefore, they are more expensive. Such loans are hardly possible to obtain within one business day as they are large amounts of money and are offered by banks only. That is why all the possible checking procedures are carried out and credit history check is not the last one among them. Unfortunately, people in need of a personal loan in such amounts and having credit score problems often are unable to hope for such a loan and have to look for other options.
If a person applies for a personal loan, he or she should not be hasty in taking a decision. There are points to consider and not the last one of them is the terms of the loan. It is recommended to think about the purposes of taking a personal loan and the potential of repayment. In case the money is needed urgently, it is recommended to take a payday loan as it is simpler to get; however, there are less beneficial terms when it comes to interest rates.
Payday loans are also available online and this also simplifies the procedure of lending, making this option all the more convenient for people in need of fast cash as well as for the ones with bad credit history.