subject: Payday Loans Vs. Bank Loans [print this page] I have personal experience with payday loansI have personal experience with payday loans. I availed one when my water heater went out a couple of years ago, and again a few months ago when I needed to get my car fixed.
I have had great experiences with payday loans and have had people ask me why I didn't just go to the bank to get them money I need. I usually laugh out loud at this and then give them an explanation.
If you have ever needed money quickly and went to a bank to get it, you would have been sorely disappointed. Banks are very careful when considering loan applications and debt to income ratios and all that, so it can take you days to even get approved and then another day or so to get the money.
Payday loans are quick, easy and very convenient and they might just be the right option for you, but let's look at the differences. I have also wanted to get a payday loan before and then realized that it was not a good time for me.
For instance, I was only working part time and knew I wouldn't be able to pay it back in a few weeks. I didn't want to get into something that would cause me more problems down the road, so I borrowed money from a family member.
So if you are trying to decide to get a loan from a payday lender or a bank, here are some differences:
From a bank or traditional lender, you first have to inquire if the loan officer is available, and sometimes you have to make an appointment just to see them. If it is a loan, they want you to have a bank account with them to get a loan through them.
Then once that is out of the way, they ask you how much you want, how long you want it and what you need it for. Some people may just not be comfortable going into detail about the reason they need the loan.
They give you the interest rate; they ask you about your work history, income and major creditors. They then tell you that they will pull your credit history and get back to you in a couple of days.
Days can pass before you even get notification of approval or denial. If you are approved but your credit score is poor, you will be paying a bigger interest rate. Once they get you to come back in and sign the paperwork, you still need to wait for the check to process or the deposit to go into your account.
The payday loan process is much easier and much faster.You go into a facility, or online which is even faster and easier, you tell them how much you want and the length of the loan.
They tell you their fees. Usually a certain dollar amount for every $100 you borrow.
You show proof of income and bank account, sign your name and out you walk with a check or a direct deposit within just a few hours. They usually won't run your credit and if they do, their approval rate is usually not dictated by your report; nor are their fees dictated by your credit score.
In fact, people with very bad credit scores are good candidates for these types of loans. As mentioned above, the online lenders make it even very easy as some offer a faxless transaction and everything is done electronically.
You should take some precautions with fast cash lenders, though. Make sure you are dealing with a company located in the United States.
Find out your states laws regarding fast cash loans so you are prepared with knowledge and will know if you are being taken advantage of. Be leery of places that don't ask for work or bank history.
When very little information is taken at the time of the loan contract, they usually won't take information when people come and cash checks at their place of business. There are people who do shady business and you don't ever want to find yourself in a legal situation.
Other than that, the process is quite simple. The industry realizes the service they are providing is short term. A good lender will advise you to seek a traditional loan if you need a large amount or if you need a longer term than just a few weeks.
