Do they have anything in common?
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The only thing that payday loans and personal loans have in common is that both of them have to be repaid following the conditions included in the agreement made between a lender and client. It is very important to weigh the differences to help you reach an informed decision about the method you are going to choose to deal with your financial situation.
Requires information about your income
Personal loans are similar to traditional ones therefore during the application process; the lender will ask you to provide details about your income. The details about your income are used to decide how much you can afford to payback. Your credit report will also be reviewed to verify whether you are eligible for the loan or not. If you are getting an advance on your next salary, your credit report does not play any role in determining your eligibility and this is one of the reasons why people who have bad credit can get payday loans. All you need is a checking account, have a stable source of income and be a citizen of the United States.
The payment method and interest charged
Personal loans are repaid over a year or several years while the payday ones are supposed to be repaid as soon as you get your next salary. The lenders who offer advances on salaries do not usually charge any interest on the loans and instead charge a fee on a specified amount of money that you borrow.
How long does it take to get the loans?
When you apply for a personal loan, it will usually take a long time for the loan to be processed. The amount of time it takes usually depends on how thorough the bank is when dealing with loans. It takes about two or more weeks to get an answer about your personal loan application. To get a payday loan, you will only have to wait for about an hour or a day for it to be processed and you get the money the same day.
How long before I pay it back?
Personal loans are long term and payment options are determined by the amount that you borrow. You get more time to pay it back if it is a large amount. The number of years you are given by the bank to pay back the loan range between 1 to 5 years. If you get a payday loan, you have to pay it all back in one to four weeks.
How much money can I borrow?
The amount of money you are allowed to borrow will usually determine the type of loan that you will choose. Personal loans allow lenders to borrow very high amounts of money and this is largely because they are long term options compared to payday loans. If you intend to get a loan that you will pay back when you get your next salary, the highest amount you can borrow is $1,500.
