What Makes Payday Loans Different from Other Types of Loan

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Loan For Emergencies

There are several types of short-term loans in the market available for people looking to get a loan for emergencies or unforeseen expenses. Payday loan is one of the short-term loans that have high interest rate.  Payday lenders compare their loan packages to bank overdraft fees, which makes their product naturally expensive. It is important that you know what makes payday loans different to make an informed decision.

Two Characteristics That Makes Payday Loans Different

Payday loans are different from other types of loan because of the following characteristics:

Available 24/7

Conventional loans are available during business days only. This is because banks and other traditional financial outlets for loans still verify documents of borrowers. They also conduct credit investigation the reason they cannot approve a loan application right away. It is crucial for banks and typical lending company to verify the borrower’s credit worthiness.

Payday loan lenders, however, open for business 24/7. They don’t require paperwork nor conduct credit check, so they can process and approve loan fast. Anytime you need money, you can apply for a loan without leaving your home. The availability and privacy of payday advance the reasons many people obtain short-term loan from payday lenders.

Exorbitant Interest Rate

Payday lenders charges exorbitant fee to borrowers because of the risk involved. Lenders simplified process and lack of credit check gives people with bad credit score a chance to get a loan. The risk of granting loans to people with bad credit rating is high, one of the reason this type of loan carry high interest rate.

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Borrowing money when you are short on cash is a sensible decision during trying times. If your credit cards balance is not even enough to cover your medical emergencies or car repairs, you can apply for a loan online. Payday loan is a practical solution because you can get an unsecured loan anytime you need money quick.

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