For most people, the best solution when they need to buy something is to get a loan from a bank or some other financial institution. Depending on the amount of money that you need, the bank might require different terms. For instance, the process of getting leasing is easier than getting funds to buy a house. However, in case that there is no reason to borrow so much money, the best options are the one where you have to return the money with your next paycheck, or the installment option, where you can return the money over a certain period. Both methods are excellent for dealing with expenses related to repairs, vacations, emergencies, but also to invest in a business, and more. Also, if you are interested in getting a Payday loan in a simple and fast way, visit bluelineloan.com.
Furthermore, while both methods represent a great option for getting funds without the need to deal with complicated papyrology like can be a case with a mortgage, leasing, or some other type where you can get much more money, there are still some differences between them as well. You should learn more about the main features and terms. Therefore, we are going to introduce you to some of the most important things that you should know about these two popular options.
Main Features
First of all, both options serve as a way to get funds and return them in a short period. Therefore, you will have to check the details before choosing any of them. For instance, check if there is a request to secure the loan by setting collateral. A lot of banks will demand this to secure that you will repay them for their service. On the other hand, some banks are giving loans without this feature, but they usually demand higher interest rates, and the total amount that you might get is lower than when you provide the collateral.
Limitations
As we already mentioned, one of the main factors that can influence the maximum amount of money of loan is related to the existence of collateral. However, there are other important factors as well, such as your income, type of contract, and other features related to your repaying capacities. The great thing is that you can check that in the bank during the meeting. You will need documentation like Social Security Number, ID, Pay Slip, or just a billing statement.
Also, if you are looking for a bigger loan, you should prepare papers related to collateral that you want to provide in a secured loan. On the other side, the process is much easier with a Payday loan, but you can expect much less money with this option. Still, it is a perfect option when you need money for some sudden expenses like vehicle maintenance, birthday present, and more. The bank can give you the amount that you can repay with your next check.
Terms
Checking the terms is the most important thing before deciding on any of these options. Since loans are so popular today, many banks are promoting their offers as cost-effective, while in reality, you will have to repay much more money than you got from them. In that matter, read more about interest rates and other details in the contract. There is a big dissimilarity when it comes to the terms in the contract between these types.
The great thing about the monthly option is that you can get a certain amount of money and repay it through fixed monthly installments. A lot of people are choosing this option to go on a vacation, but a new phone, renew the kitchen, and many other things that require more money than their monthly salary. On the other side, the payday loan will be repaid instantly when you get your next pay. However, the fees and interests can be very high for this option.
Fees
The main thing that you should know about the percentage rates is that banks are using different terms depending on the amount of money you want to loan. In that matter, the percentages will be higher when you want to take less money. For example, you might have to pay 20% interest for $2,000, while the rate will be lower than 10% for loans that are $15,000 or more. Moreover, you have to be aware that there are some other fees in the contract as well, such as the recording fees, document fees, non-filling insurance, and administrative fee. This is mostly related to the installment option. When it comes to a payday loan, the average rate is 15%.
Process of Application
It is not a rare case that many people get confused when it comes to the whole process of applying and collecting documents. Therefore, it is essential to learn more about the most important papers and terms that you must comply with in order to get an approved loan. In most cases, the bank will take a look at your credit ranking and things like the existence of any unpaid debts, income, residence, and more. When it comes to an installment loan, you will need a lot of documents related to your identity, the place where you work, and more. On the other hand, an ID or pay slip is enough to get a payday loan.
The Bottom Line
As you can see, the process is not so complicated when you know the exact type of documents that you need to provide. Also, many payday companies might offer much lower interest rates than banks. Therefore, you should never rush with your decision about choosing the right lender. When it comes to the difference between them, you should choose the right option according to your current needs. For instance, if you only need a small amount of money until your next paycheck, you should choose the payday option. However, buying a car or repairing the home will require much more money, and in that case, the monthly installment is the best choice.
