A payday loan can be defined as a short term loan which you are supposed to repay at your next payday. Most payday loans range from 500 dollars or less while the installment loan is the loan that you follow a number of repayment scheduled and is paid for a specified period of time. Unlike the payday credit, it is a long term loan. An example of installment loan includes the auto loans and the mortgages. Below are the reasons why the payday loans are better when compared to the installment loans.
It only takes the payday lenders just a few minutes to approve your application, however for the application to be fast and successful you have to provide the lender with all relevant information and it must be correct. Unlike the installment loans where you have to fill the lengthy forms, in this loan, the application is easy and quick. Also, when it comes to transferring of money from the lender to you it only takes a few hours, meaning you are likely to get the funds the same day or latest, the next working day. The installment loans take up to two weeks at times to get approved meaning the loan will be of minimal help in case of emergency. The good thing with payday lenders they usually inform you whether you have qualified for the loan or not so that in case you don’t qualify for the loan you can look for alternative means to get cash.
For you to qualify for the payday credit, you only have to fulfill the basic requirement. One of the basic requirements is a steady source of income which can be verified. Unlike the traditional loans that require collateral; under this loan, you do not need any collateral. The payday lenders are usually interested in the stability of your income which to them is enough proof that you can manage to repay the loan. The other requirements for this loan are permanent registration of you as resident of a particular neighborhood and you should have an active checking account.
There is also an age constraint when it comes to people who can access this loan i.e. 18 years and above. In most cases, people with permanent jobs are the one who meets this loan requirement. In case you have a poor credit rating then payday credit would work for you very nicely since unlike the installment loan which considers your credit rating, the payday lender does not consider the credit rating only your capability to repay.
You Can Qualify for Higher Amount
As a new borrower, the payday lenders will limit the amount of loan that you can access so that they can monitor your repaying behavior. Remember, the amount of loan that you have access to usually lay between the lender’s range and your salary range. It is advisable to always pay the loan within the specified time since it will determine whether the lender will increase the amount of loan that you can access in your subsequent borrowing.
The payday lenders are guided by the laws of the state when it comes to the maximum or minimum amount of loan that they can lend. During the application process is when you know how much you qualify to borrow. Remember prompt repayment of the loan creates a good relationship with your payday lender who will always provide you with a quick solution in case of an emergency.
Protecting Your Credit Rating
Most people do view the short repayment period as a shortcoming of the payday credit but in case you want to protect your credit rating, it can greatly work for you. To get my point let’s take an example of an installment loan, when you borrow an installment loan it will take you one to two years to repay the loan. During this one or two years anything can happen for example you can lose your job which is your source of income, this means you are likely to miss some installment as you look for alternative source of income and this will result in a decline in your credit rating and an increase in the cost of you loan due to the fines and penalties incurred.
A credit card is said to be convenient but for you to protect your credit rating, you have to be well disciplined when it comes to spending. Most cardholders do confess that they find it difficult to control their spending which results in them spending more than they can afford hence further affecting their credit rating.
A payday loan is very convenient since all interaction between you and the payday lender is done online. This saves you the hustle of having to book an appointment with a loan officer. With this loan you will send the application form from the comfort of your office or home, you don’t even have to call the lender several times for you to get the cash. Remember for you to get an installment loan you have to meet the loan officer in person.
The other convince of this loan is that you can spend the loan in anything including repairing your car or paying for your water bill. Most installment loans are issued for a specific purpose. For example, a home mortgage can only be used to pay for the house and not any bills no matter the emergency. Also, the paperwork involved in payday credit is very minimal at times some payday lenders do not ask you for any document meaning there is no faxing; however there are those who insist you send them the proof of your income. The good thing it will only take you just a few minutes to fax the payday lender all the relevant documents.
As I conclude, a payday loan is the most convenient and the fastest solution to all your financial emergencies. You do not need good credit rating or collateral to get cash from payday lender unlike in the installment loan. However, it is your obligation to ensure the borrowed cash is repaid on time otherwise you will have to deal with lawsuit and penalties.