There is no doubt that there are situations when people need to get a loan in order to survive rough times in their lives or perhaps they need one so that they can start a business idea and they need to invest a certain amount of money to do it.
In this article we are going to be talking about two of the most common loans that a person can choose from.
The payday loan and the personal loan.
The Payday Loan
The process behind this particular loan is very simple. This is ideal for emergencies but certainly should only be used for very serious emergencies. You will get a loan based on the amount of money you get in your paycheck and as soon as the next paycheck comes in, the amount you lend will have to be paid back, but there will be high interests involved so you really only want to do this when there is no other option for you.
The good thing about the payday loan is that you will usually require nothing but proof of the fact that you are employed and that you have a paycheck coming within the next 15 days or 30 days. This kind of loan is also perfect for anyone who has no savings account or credit cards, but you won’t be very happy with the kind of interests that will have to be paid so the best suggestion is to avoid making this the norm.
The Personal Loan
Personal loans are completely different because they require that you have a credit history and the amount of money that is going to be given to you is going to depend on how much capacity you can have to pay it back. Just think of the personal loan as the same process that you would go through if you happen to buy a vehicle with credit. The protocols are quite similar in the sense that you will be given a loan that will determine the kind of down payment that you can give in order to get the car.
Personal loans requires that you shop wisely because there are all kinds of scams out there and you need to be on the lookout for them. There are many private money lenders who set up shop just to scam people by asking for ridiculous rates and by asking for down payments in order to have the money wired to them. Then the person asking for the loan never receives it.
It’s say to find out if you are working with a scam or a legitimate business. Normally the shady lenders will make it all seem too easy for you and that is the first red flag that you need to keep in mind at all times.
Asking for a loan is something that you should always give a lot of thought to before you even decide on the amount that you will be asking for. Now you have a better idea of the difference between the payday loan and the personal loan. One has practically no requirements except your paycheck, but the interests are huge and the other requires a lot more documentation in order to determine how much money will be approved for lending.
Always make sure that you can pay for your personal loans in time if you want to keep your credit score intact in order to be able to ask for future substantial loans that you might need to purchase a home or make a large investment for a business venture or a personal need.