Private Loan vs. Payday Loan

Image result for Private Loan vs. Payday LoanIf, for one reason or another, you find yourself in a dead end on the financial side but you need a large amount of money to acquire a property or to make a payment, you will surely fall on option to apply for a private loan or for a payday loan. But what is the good option?

If you are tinkering with a loan until you get back to its ground state, you will notice that a loan is essentially made up of a few factors: the size of the loan, the loan term, and the cost of borrowing. Another noteworthy method is the method of payment required to repay the loan, as this is important when considering payday loans. In the same vein, ask yourself the following questions:

1. How much money do you need?
2. When do you need it?
3. How much can you afford to repay each month? (This concerns the cost of borrowing, for example the interest rate)
4. How long can you afford to make these payments?

So, let’s look at a few different scenarios to determine the type of loan that works best for you.

If time is a factor, and the amount of money you need is less than $ 1500, then a payday loan would be the right choice. Payday loans are fast and convenient, and it works in a very simple way: you get the loan for which you applied and the day you are paid, a certain amount of money will be withdrawn from your bank account to repay your loan. It is a quick and convenient approach because you can get the loan you want very quickly and without having a headache, as long as you meet the loan qualification requirements.

Payday loans are known to be very expensive, but this cost is justified by the infallible automation offered by most lenders.

If you need a larger loan, your first option may be to opt for an unsecured private loan. Once again small (usually below $ 5000), this type of loan is not as “automatic” as a payday loan would be but quick enough to get (especially if you compare to something like a home equity loan). The method of repayment varies from lender to lender. The cost of an unsecured private loan is only a fraction of that of a payday loan.

If the cost (the interest rate) of a loan is important to you, then the unsecured loan may not be what you are looking for. For a loan to be negligible, the lender will want to have some kind of collateral in order to reduce the risk and the loss that would come with the event of a default. The usual assets that are used to obtain a loan are the vehicles or the goods. Individuals who are looking for smaller loans often avoid refinancing their home (the cost of breaking a mortgage loan may not be worth it) but rather opt for a better alternative: that of refinancing their mortgage. vehicle . This is a fairly easy thing to do if you own your vehicle or if your vehicle has a high value (if you have paid a large portion of the financing for your vehicle). If you have any questions about payday loans, private loans or car loans, do not hesitate to contact us by clicking here . What is the best option, do you think? Let us know by leaving a comment below.