Many people believe that personal loans and payday loans are totally different. Partly, they are correct. However, the extent of the similarities and difference are not fully disclosed. You may need to research for a while to get the meaty information about personal loans and payday loans.
To properly understand these types of loans, you can analyze them based on various attributes.
When it comes to reputation, the regular personal loan is more acceptable. Experts recommend personal loans philippines because of a combination of different factors. Around the world, numerous blogs and websites are discussing the nature of personal loans.
Payday loans, on the other hand, reside on the darker (or grayer) part of the spectrum. Some experts think that salary loans will cause people to sink quickly in the trappings of debt. Others believe that proper loan management can get you out of the cycle of payday loans.
Personal loans singapore have manageable interest rates per month, and these rarely change. While not all personal loan lenders agree to a common ground, their rates are justifiable and can match the lifestyle of the average employee or freelancer.
Payday loans are notorious for outrageous interest rates. If you’re not too careful around payday loans, you’ll end up paying more than 200% of the principal. Most payday lenders also collect weekly interest and they may resort to unscrupulous methods to get what is owed.
Credit Check Process
Since personal loans are offered by banks and sanctioned organizations, there’s a credit check system that must be followed. In this process, the lender will review your credit status, income report, and personal profile. From there, your application can be approved or declined.
Because of this credit check process, application may take longer. Some borrowers waited for a day before their funds are released. It’s estimated that up to 60% of global borrowers are denied every day.
For payday loans, the credit check system is almost nonexistent. Once you visited a payday lending site, you just need to input the necessary information and you’re good to go. The application can be finished within 30 minutes or an hour, depending on the lender.
Personal loan lenders, typically, do not issue collaterals. To collect the money owed, they rely on collection agencies and other representatives. If payment is not collected, personal loan lenders pursue the necessary court action.
The same can be said for payday licensed moneylenders. They have persistent collection agents that can bug you day and night if you missed a payment. So, make sure you don’t miss a term.
In a way, there’s a fragile line that separates personal loans and payday loans. The terms can be used interchangeably and they still serve the same purpose. Bottom line: as long as you can repay the loan at hand, the difference will rarely matter.