There are many types of loans available and so if you want to borrow a few extra dollars it can be hard knowing which to choose. You may know lots about loans and lending or very little, and either way it can still be hard to choose because there are so many options available. One option that people tend to know less about is the payday loan. These are newer than many other types of loan and tend to be offered by lenders outside of the mainstream ones. Therefore, many people do not know a lot about them. This means that it can be worth understanding what makes them better than other loans so that you can decide whether they will be a useful option for you.
- No credit check – payday lenders do no credit check. This is because they were set up to help those with a poor credit record as it was noticed that they did not have many borrowing options. Therefore, they set up a loan where no credit check was done which meant that it was available for everyone. This means that you do not have to worry about whether your credit score is good enough to get a loan. You will be able to get one regardless and therefore you will be able to not worry about whether you credit score will be good enough. It can be possible that you will be turned down for a loan if your credit score is not good enough and this will not look good on your credit report and could reduce your score even more. This means that if you choose a payday loan, where you will not be turned down, you will not have a negative impact on your credit score when you apply.
- Quick to arrange – A payday loan is quick to arrange which means that it can be suitable when you need money in an emergency. Some lenders will be able to arrange for you to have the money within a few hours and most would get it to you within a few days. This means that if you need money quickly, then they could be really useful. Many other types of loans will take significantly longer to organise and you may just not have the time available to wait that long for the money.
- Short term – payday loans only last for a few weeks. This means that you do not have the loan hanging around for very long. This can be an advantage for those that do not like the idea of being in debt for very long. There are some people that will worry about owing money and worry about managing the repayments every month. These people could be a lot happier if they know that they will be able to pay off the loan very quickly and therefore clear the debt within a few weeks.
- Lend small amounts of money – payday loans are only available for amounts less that £1,000. This means that you will normally only borrow a few hundred pounds. This can mean that the loan is much more manageable than when you borrow larger amounts. Often, you have to borrow larger amounts for loans. It can then be tempting to spend that money and you can then find that you will spend the money and then find it really hard to repay it. Therefore, if you can just borrow a small amount then you will find it easier to repay and you will not be in debt for so long.
- Easy to Arrange – sometimes it can be the application process that puts people off when they are looking for a loan. There can sometimes be a lot of paperwork to fill out and you might even need to go to the branch of a bank and speak to someone about the loan. This can be daunting and take a long time. With a payday loan you may be able to apply online or over the telephone. The information you provide is minimalist so the application process should not be daunting or tedious. The lenders realise that you might need the money fast and so make sure that it is quick to apply so that you can do so quickly.
Therefore, you can see that there are many differences between payday loans and other types of loan. This means that it is good to consider the when you are deciding which loan you want. It may be that a payday loan will suit your needs better than any other type of loan. It is good to think about what you need from a loan and then you will be able to think about whether a payday loan matches your needs better than other types of loan.