Payday loans have become more popular among people of all ages. As long as you have an internet access, an ID and a bank account, you are eligible for this emergency loan from different lenders. There have been sparkling debates of whether payday loans are better than conventional short term loans.
Here are a few comparisons
The credit score check
Short term loan lenders will check your credit score before they approve any loan applications. If you have a low credit score ranking, it will be difficult to get a substantial loan or any loan for that matter. A poor credit score means you have a bad credit history filled with late payments and unpaid loans. With a good credits score, you will receive a loan from most short term conventional lenders.
Payday loan lenders do not check your credit score to determine if you will get your loan approved or not. It does not matter how much of a poor credit history you have, you will still receive the payday loan.
The difference in the application process
When applying for a short term loan, you will have to travel to the physical location of the lender with a hard copy of all the requirements. A representative helps you go through all the terms, conditions and requirements, and then you fill the application form and wait for feedback.
The loan application process for a payday loan is easy; all you do is visit several website on a computer or phone to find the perfect deals. You can do this anywhere at any time. When you have found the perfect lender you create an account on their website, filling in all the necessary details and finally apply for the loan and wait for feedback.
Getting a short term loan can be difficult in terms of qualifications. You will need an identification card, a proof of income and employers contacts, collateral, credit score and a lot more personal information when applying for the loan. Without all these, you will not be eligible for short term conventional loans by most lenders.
Getting a payday loan is so easy; anybody can do it. The qualifications for this loan are not strict. You will need a valid identification card or driver’s licence for proof of citizenship and an active bank account where the lenders can deposit the money. You will not need collateral for this kind of loan.
The repayment method
A shorter loan has several repayment methods. You can choose a monthly, bimonthly, quarterly or yearly plan depending on the terms of the lender. You will have to pay the amount set by the lender plus interest until you complete the loan amount. The repayments may be made by the lender by taking it directly from your bank account before you can access the income.
With payday loans, the amount is to be paid weekly, daily, or full loan and interest as long as you beat the deadline. The lender has no access to the funds so you automatically pay the loan yourself
The final word
If you are facing an immediate emergency situation, then a payday loan will work best for you. short term conventional loan are good for business development because you receive a higher loan and have a longer period to pay it back.