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 Payday Loan Articles


Are you confused about whether you should take out a cash advance payday loan or a conventional bank loan? Do you not know which type of loan is applicable to particular situations? Whether it is for a home, a car, electronics or bills, you are able to easily finance almost any possession these days. However, should you use a conventional bank loan or a cash advance payday loan to finance these goods? The type of loan you choose greatly depends on what you want to use the loan for and how long you wish to finance it for. In order to better understand which loan you should choose for a particular situation, you need to distinguish the similarities and differences between a traditional bank loan and a cash advance payday loan.

There are actually very few similarities between the two. In each case, you need to apply to qualify, pay loans on time, and if you miss a payment, you will be charged penalty and interest fees. Besides these three qualities, there are no real other similarities between the two loan types. Therefore, what are the differences between a conventional bank loan and a payday loan?

Bank loans and payday loans differ greatly. One of the largest differences between both loan types is time. A bank loan will typically take a week or two to process. A payday loan is usually processed within twenty four hours. A bank takes your credit history into account in order to approve the loan. The only requirement for a cash advance loan is you have to be employed for at least three months and generate a monthly income of more than one thousand dollars. In fact, a payday loan lender does not even run a credit check in order to approve your loan. Bank loans are generally for big-ticket items such as a house, car or boat. A payday loan is for smaller less expensive items such as medical bills, car payments, insurance payments, or reasonable electronic purchases. A great rule of thumb: Bank loans are for long-term investments while payday loans are best utilized for short-term expenses.

Let's go through a couple of scenarios in order to better paint the picture of when it is applicable to use a payday loan or a conventional bank loan. Say you have just been in a car accident and you had to pay your auto insurance deductible. To make matters worse, rent is due and you have no means to pay it. This would be a great opportunity to utilize a payday loan. This is a wise idea because it is not a large payment outside of your immediate means, and you are certain you will be able to repay the lender once you get your next paycheck.

Now, say you would like to purchase a new car. You would then go to your bank, take out a conventional auto loan with a repayment period of three to five years at a low interest rate. You would not want to use a payday loan in this situation since your loan would be well over one thousand dollars, and the repayment period would be substantial.

Knowing whether you should use a conventional bank loan versus a cash advance payday loan is extremely important. You do not want to use a cash advance payday loan for big-ticket items which you can not necessarily afford in the future, since the interest rate and late fees are so cumbersome. Additionally, purchasing cash advance payday loans for the wrong reasons can negatively affect your credit for a long period of time. It is best to only use a cash advance payday loan for short term expenses while you should use a traditional bank loan for large investments.



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