No paperwork, no credit check, no collateral! Can you guess what it is? Sure, these are the main features of payday advance that make this kind of loans more preferable compared to the traditional way of borrowing money from the bank.
Every day we face a need to make variety of choices, one of which is what kind of loan to choose in case of finding ourselves in trouble. In order to take a reasonable decision each borrower should be well-informed and have a clear picture of what each financial product can offer.
Payday advance is a very popular way of getting money today, especially among those who can’t save for a rainy day. However, even if you do your best to manage your budget thoroughly, you can’t be 100% sure that nothing unexpected happens. And then you have the dilemma: payday advance or traditional loan from a bank. Payday advance seems to be tempting but unknown, at the same time the standard bank services are not easy to get but more understandable for some categories of customers. Here we will try to make things clear for those who haven’t used payday loans yet and don’t know what they can get applying for them.
Features of Payday Advance & Traditional bank loan
Payday advance characteristics:
It is a popular financial instrument, however, it should be used only by those customers who know how they work. In case you want to buy a new dress, which you saw last week or borrow money with the aim to impress somebody with an expensive present, payday advance is not for you!
Smart borrowing includes clear understanding of all pros and cons of such short-term loans and your real financial opportunities to repay money within one or two weeks. The main question you need to ask you each time you are going to apply for a payday advance should be: “Will you be able to live on a shoestring budget or you need money badly till your payday?” If you really can’t live without this amount of money, then use benefits of payday loan remembering that you will have only 1-2 weeks to give loan back plus interest rate. Be careful applying for a payday advance getting acquainted with the terms and conditions offered by the lender before you sign a loan agreement.
The main features of a payday advance are:
- Short repayment term.
- Small amount of money ( 100$-1000$).
- Unsecured loan with no collateral.
Bank Loan characteristics:
Compared to the payday loan, the bank credit isn’t necessarily short –term loan, which should be repaid within one or two weeks till your next payday. In most cases, bank loans are intended to be used for the longer period of time and can be given with some collateral, which will serve as a guarantee of the loan repayment. Banks offer larger amounts of money, for example, car loan or mortgage loan, which can exceed 1000$. However, it is not simple to get bank loans and the whole procedure of being qualified for the traditional bank loan will make you spend much more time compared to payday loans.
Compared to Bank Loan, Applying for Payday Advance You Benefit from:
- Acceptance of any kind of credit
In case you have bad credit score, payday advance for bad credit borrowers is able to provide you with effective solutions of your financial problems. One of the benefits is the fact that you don’t need to explain anybody what has made you request for extra source of money. Nobody is interested in such information as it doesn’t refer to the requirements of getting a loan. Moreover, no credit check provided is also considered to be a great advantage for you, if your credit rating is far from perfect. It should be noted that this is the most important difference between banks and payday lenders as loan requests of bad credit borrowers are rejected by bank institutions. That’s why if you have problems with your credit rating you don’t even face the necessity to choose among these two kinds of financial help as the only loan you can get will be the payday advance.
- Easy online application
In order to apply for a payday advance you don’t need to be a smart PC user as the application form is rather simple and easy to fill in even if you don’t use Internet often. The application form requests the basic personal information of the borrower, without which it would be impossible to identify you and fulfil your request. This is one of the major advantages for those who don’t have enough time to go out and stay in queues waiting for the chance to find out which information is required, then to spend much time for paperwork and faxing and only in several days you will be able to find out if you have been approved. Those borrowers who have always used bank loans find it even enjoyable to apply for a payday loan online, when they use it for the first time. 3-5 minutes and your application is ready to submit.
- Privacy and confidentiality
- 100% Fast Approval
You won’t need to waste time waiting for approval in case you choose payday advance as the processing of your application form takes just 10-15 minutes. You can send an application, have time for your coffee and then get your positive answer via e-mail or telephone call, which you have provided in the field with your contact information. It is important to give valid contacts in order the manager can contact you and inform about the confirmation of your opportunity to get an online payday advance.
- Absence of collateral
The only thing, which is required from the payday advance borrower, is an ability to prove his/her current employment with the help of paycheck. Lenders of payday loans online take great risks lending loans without collateral that’s why the interest is higher compared to bank loans.
- Urgent money when you need it badly
Payday advance is what you need in emergency situation, when you don’t have time to wait. The whole procedure of getting money takes one business day. After you are approved for the loan, it will take from several hours till one working day, when you are able to check your banking account for the payday advance transferred directly to you by the lender.
- Convenient system of repayment
Nowadays you can both borrow money and repay it without even seeing your lender. No need to go out anywhere makes it very convenient not only while borrowing but also repaying the loan in such a way. Just be sure to have the necessary amount of money on the due date and the lender is going to withdraw it from your checking account.
The traditional bank can’t provide such repayment mode and you need to visit the bank paying monthly installments on the fixed dates.
Things to Keep in Mind Before You Apply for the Payday Advance
As you can see, on the one hand the payday advance can offer you a lot of advantages. But you shouldn’t forget about some things, which can prevent you from this kind of borrowing:
- First of all, the repayment term: you should be more than sure than it won’t harm your budget to pay money back using your next salary.
- The other thing to think over is the high interest rate due to the absence of any guarantees to the lender that he is going to get his money back on time. By the way if to compare with the traditional bank loans, they offer lower interest rates as they usually ask for collateral.
- One more point to consider is an opportunity to apply for the amount of money only up to $1000. Sometimes it is a drawback as even the emergency situation may require larger amounts of money. Compared to the fixed amount of short-term loans, the traditional banks can offer you the maximum sum, if you can provide the proof of your current employment where the salary is stated, which is not less than the sum you should repay during the certain period of time or the larger sums of money can be offered depending on the guarantee mentioned in the contract.
- Think how stable your current financial situation is as in case you are not sure that your income source is steady – better don’t apply for the payday advance as non-repayment may lead to trouble even worse than you were in before getting money.
- Some customers are afraid of being unable to repay the loan on time and get into trouble because of the necessity to rollover the payday advance again and again, which will lead to waste of money, which amount can exceed the initial sum of the borrowed loan. However, there are some recommendations, which you can use in case of having such situation. Find out more about extra steps for avoiding the rollovers here:
Tips for Smart Borrowers: How to Avoid Repeated Rollovers of Payday Advance?
The most number of customers, who choose payday advance, don’t know much about the process of rollovers that can be requested, if a borrower can’t repay the loan on time or they can be provided by the lender automatically. There is one effective recipe how in order to avoid this cycle of the loan: you need to gradually reduce the requested amount of the loan. Let’s consider the following example for you to understand what is meant here: if your original loan was $600 and you repaid it on your payday but still need additional sum, take out $500, the next time you should take $400 and so on, reducing the loan amount at intervals. This way will help you to become free from your debts within the relatively short period of time.
Quiz” What is the best solution to you current problem: payday advance or traditional bank loan?”
- Do you prefer traditional ways of getting money to new lending services?
- Are you looking for the low fixed interest rates?
- You don’t find it annoying to be involved in a lot of paperwork and procedures requiring much documentation?
- Have you faced unplanned expenditures requiring more than payday advance can offer you?
- Do you feel secure using Internet website while applying for the payday advance?
- Your credit rating is not good enough for bank loans?
- Are you able to meet all payday advance requirements?
- Is the amount of money from one hundred dollars to one thousand dollars enough to solve your financial crisis?
- Would you like to get money directly into your banking account?
- Do you think that it is better for you to repay in installments than the whole amount at once?
Answers: If you have answered “Yes” to questions numbers: 1, 2, 3, 4,10, then the traditional bank loan is fine for your needs.
If you have replied positively to questions numbers: 4, 5, 6, 7, 8, 9, then payday advance is exactly what you need to solve your financial problems.
In case you doubt how to answer some questions, you need to weigh all pros and cons once again and get a professional consultation concerning the current situation you have found yourself in.
Each person chooses what he/she needs in the definite situation. Payday advance has its own benefits when the traditional bank loan also has some good points to consider. It can’t be said unambiguously that one of them is a bad one and the other one is able to offer only advantages. They are just different and should be used for various aims. In case of emergency- payday advance wins but in case of choosing lower interest rates – traditional bank loan can be chosen, if you are enough patient to have money only after a great number of procedures, which can be avoided while using the payday advance, which makes this kind of loan extremely popular nowadays.