Payday loans are actually short term loans that do require a specific rate of interest. When an employee has got emergency or unexpected expenses and has exhausted all the available ideas needed to acquire fund, then there is no other alternative but to opt for a payday loan to pay for the acquired expenses. Unexpected loans can erupt as a result of acquiring emergency medical bills, vehicle repair or outstanding debt. They are normally instantaneous on approval and are mostly not more than half the monthly income of a salary earner. The time frame for repayment is usually between 7 – 30 days, depending on the length of the employee’s paydays. The annual percentage interest rate normally begins from 400 percent, based on the amount lent. Advantages of Payday Loans
They are characterized with a fast application process. They are normally processed within 24 hours from the time of application hence, making them more convenient to acquire promptly. This goes a long way to help the wager settle outstanding debts within the shortest possible time. Unlike bank loans which do take a period of 6 months or more to process even after approval is granted. Payday loans are usually quick cash to obtain. Companies do not take time to take a look or investigate the wagers credit while granting this kind of loan. The most important documents required for the application process are proof of employment and the employee’s bank details, which serve as an assurance to the fact that he/she would be able to pay back the loans obtained at the stipulated time. Payday loans are the fastest and easiest way of obtaining approved finance meant to cater for abrupt expenses. Most a times, they are usually obtained online, through fax and by phone. Disadvantages of Payday Loans
It lacks cost effectiveness. When it comes to making repayments for an acquired payday loan, it becomes quite expensive. This is because of the mandatory 25% interest rate it is associated with. Since they (the issuing organization) are not regulated by any financial cooperation, they often charge high interest loans. This makes the process of acquiring payday loans to seem inconvenient. Personal Loans
These loans are commonly referred to as unsecured loans because they do not require assets from the borrower before they can be issued. Assets act as collateral securities nevertheless, the lender has to be assured that the borrower will certainly payback the acquired loan within the stipulated timeframe. A proof of income received and a history check is performed to check for regularities which in turn are used to determine the borrower’s ability to repay promptly. However, this process is usually unsecured because the tendencies abound that the borrower may default in repaying the loan as they lack collateral security. Advantages of Personal Loans
Application for personal loans can be made online. This enables the borrower avoid the stress of making long queues in banking halls to acquire loans hence they are more convenient to obtain. When seeking for personal loans, there is little or no need for detailing the purpose of applying. There is no follow up on the way the money shall be spent, thus giving borrowers solid confident to apply.
Disadvantages of Personal Loans
Personal loans accrue high interest rates. It is advantageous that the borrower pays back the loan right on time so as to pay with a low interest rate otherwise he/she will incur extra charges for interest if delay occurs. Lenders lack additional fee to the borrowers who perform an early repayment hence discouraging people to borrow such loans. In conclusion, It is always advisable to know about Payday Loans, Personal Loans and their merits and demerits.