What do you think of when you hear about payday loans or personal loans? It could be a quick source of emergency funds or a debt headache. In most cases, payday loans and personal loans fill the void when you have an emergency and you don’t have enough cash.
Before we get into the benefits of payday loans and personal loans, let’s talk about these loans first.
What are payday loans and personal loans?
When I say payday loans, I mean the type of loans that you take out in the middle of the month and pay off on the next paycheck. Interest rates are generally high, starting at an APR of 390%, which is higher than a typical loan.
Payday lenders are hiding in the high rates, saying they are hedging the risk of default since they are dealing with high risk clients. However, the high interest rates do not prevent people from taking out payday loans.
Personal loans carry a wide variety of loans that you take for individual needs. The lender does not limit you on how you can spend the personal loan you take out. And it is different from mortgages or auto loans.
What Are the Benefits of Payday and Personal Loans?
1. It’s easy to acquire
In most cases, anyone can get a personal loan, as long as they can prove they can afford the loan. In addition, the application process is generally transparent and straightforward. Still, lenders don’t need a lot of documentation, unlike other loans that require collateral.
You only need the following:
- A valid identity document
- Resident’s real address
- Stable source of income
- Being older than 18
This means that getting a personal loan is not that complicated.
2. They are not guaranteed
Payday loans and other personal loans do not require the borrower to have collateral when applying for the loan. And that means that if you don’t pay back the loan, the lender won’t come looking for your property to get their money back.
Lenders depend on your repayment capacity, which is why they don’t require you to post collateral.
3. There is no credit check
When requesting fast payday loans online, lenders do not perform credit checks. It is because they believe that the past does not dictate how the future should be. Plus, your paycheck determines the amount you get as a payday loan.
You can spend a personal loan for any reason you want. It could be vacations, car repairs, home improvement, debt consolidation, education, or even paying grocery bills.
It doesn’t take long for the lender to find out how you are spending the money. All they need is for you to pay according to your agreement.
5. Better interest rates
If you have a good credit rating for personal loans, you can get a loan with better interest rates than payday loans. Getting reasonable interest rates ensures that you don’t find yourself in the debt trap due to the high interest rates.
6. You can apply for a payday or a personal loan online.
With ever-changing technology, payday lenders and personal lenders have flooded the Internet with great loan offers. Customers are on the Internet in today’s world, so you have to bring the services to the Internet. And that’s what personal lenders have done.
Personal and payday loans can be a great way to get emergency loans. However, if you don’t manage them well, you could end up in a cycle of debt. Therefore, you can consider creating other sources of income that can help you avoid getting into debt in the long run.
Remember, if you need a loan, you should only take the exact amount you want. Don’t take more than you can comfortably repay.