Credit? Payday loans? Which of these options is better? It depends on the situation we are in and our specific needs and expectations.
Ease of receiving money
Unlike loan companies, banks are public trust institutions and their operation is strictly regulated by banking law. Hence, they cannot grant loans to people who may have a problem with repayment. First they need to verify and assess the customer’s creditworthiness. Therefore, granting a loan takes more time than taking a payday loan.
One of the basic differences between a loan and payday loan is the repayment time. As for the payday loan, the name itself clearly tells us that it is a short-term financial commitment. Most often, the full amount should be repaid within 30 days of receiving the money. In some cases it is 60 days, but this is the maximum period.
Credit is a long-term commitment – it can be taken not only for many months, but even for years. The repayment is divided into installments, in contrast to the payday loan, the amount of which must be paid in full at once. This means that credit can be a better option for those who are afraid that they might have problems paying back payday loans. Repayment more stretched in time and spread over installments can certainly be an easier and safer option for many.
How much can you borrow? Taking a payday loan, we can usually borrow a relatively small amount, usually in the range of 3000-7000 USD. That’s what such loans are based on – we borrow small amounts for a short period of time. The loan gives much more possibilities in this respect. It can be granted for up to USD 200,000.
Therefore, if we need a larger amount, payday pay will not be a good solution. Credit is a better option if you are planning a large investment.
In the case of loans and credits, we must not only repay the entire amount granted to us, but also make additional payments. Banks and loan companies want to earn money. Everything that we will have to pay except the loan or credit amount itself, and therefore interest and commissions, among others, are the costs. Due to the short repayment time, they are higher in the case of payday loans.
However, the differences in costs are not as great as they used to be. Payday loans are lower than just a few years ago. This is because of the new regulations governing the rules for granting loans. Certain limits have been imposed on interest and commissions, so loan companies cannot screw prices unlimitedly at their own discretion. This means that payday loans and loans are now more similar in price.
In addition, payday loans can be profitable in one respect. Some lenders offer the first loan for free. This means that if we take a payday loan from a borrower for the first time, we will only have to pay back the amount borrowed, with no additional fees. Of course, taking more payday loans from the same borrower, we will have to bear some costs.