If you need cash to cover expenses, you are probably trying to
figure out the best way to borrow money. There are several options to
consider, including borrowing money from friends or family, getting a
cash advance with your credit card, taking out a traditional bank loan,
and applying for payday loan. This article will cover the last two
options, bank loans and payday loans, and compare the requirements and
advantages of each. After reading more, perhaps you will have a better
idea of which is the right choice if you need cash.
There are several
important factors to consider when deciding which type of loan you need.
Do you need a large amount? What is your credit history? When will
you be able to pay back the loan? Lets look at a few key points that
can help you decide if you if you should apply for a bank loan or a
How much do you need to borrow?
tend to be for smaller amounts, usually a few hundred dollars up to
around a thousand dollars. The need cash amount you can borrow certainly wont
exceed the amount of your next paycheck, because this is the need cash that
the payday lender is counting on for repayment. If you have an
unexpected car repair and don’t have cash on hand to cover the mechanics
bill, a payday loan could cover the costs until your next paycheck comes
in. If you need a new car, however, you will have to apply for a bank
When do you need the money?
A banks loan approval
process takes time ” typically weeks (or even months in the current
economy). So if you need cash fast, a bank loan is not for you. Bank
loans work better for planned expenses than for unforeseen financial
emergencies. A payday loan, on the other hand, means the loan will be
approved quickly and you can have your need cash in your checking account in as
little as 24 hours.
When are you able to repay the loan?
If you can get
approved for a bank loan, you will typically have years to repay the loan
and have the option of making very low monthly payments. This is
convenient because you know you have time to repay your debt. With a
payday loan, you usually have a couple of weeks or at most a month to
repay the full amount of the loan, plus the interest charged. You have
to keep in mind that a large part of your next paycheck will go to pay
back your loan, so be prepared to cover your normal monthly expenses and
settle your debt in a tight time frame.
Finally, a note about interest rates. . .Remember
that a payday loan is a SHORT-TERM credit option. Payday lenders charge
high interest rates for the convenience of obtaining a quick and simple need cash
loan, so these types of loans should be used for emergency expenses
only. Rolling over a payday loan can be costly, so plan on repaying it
in full with your next paycheck.After answering these questions,
you should have a better idea of which type of need cash loan best fits your
needs. Consider all your options carefully before deciding if a bank
loan or a payday loan is right for your financial situation.