James Clark / October 16, 2018
What Is The Difference Between A Cash Loan And A Personal Loan?
In difficult economic times, it is easy to get into situations that require some extra money. In such cases, the best thing some can find is to borrow from a lending institution, and it is desirable to know the choices at stake. Two common loans for you today are fast cash loans and personal loans. Selecting from the two can be hard, as both of them have their share of benefits and demerits. Some people confuse them as the same thing, but they are entirely different, and this article will lay out the differences and help you determine the best one for your situation.
These are instant cash loans that have a short payback time. The amount of money you can get from this loan is not much, and the maximum can be around $1,500. They are easy to get since they involve a little amount of money and can be treated as a pay advance if you are requesting it from a bank that handles your payments. The lending institution is not entirely interested in a credit check, and the loan is not secured. The payments can vary depending on the agreement, but they need to be done within the shortest time possible.
One significant advantage of these loans is that their application process is fast and easy. You can get the money within 24 hours, and payment is manageable since the amount is not that much. They are very flexible, and you can pay the money in lump sum when you get it back even if it is just a few days after you received the advance. Your credit score is not a significant determinant, and people with poor scores can still get money. When you have a good reputation with a specific lender, they can increase the amount that can be provided to you meaning that you will always have a source of funds in case you get an emergency in future.
Cash loans have one notable drawback in that their interest rates are higher than that of major banks. Failing to pay the loan within the set date can get you slapped with hefty fines and charges.
These are more common, and they are offered by lending institutions suited to borrowers who need a lot of money to be paid over an extended period. It is better suited for huge investments, and the amount can get to over $10,000. They can be secured or unsecured. The secured ones have a lower interest rate since the borrower is exposed to lower risks. If you are unable to pay the loan, the lender will confiscate the goods used to secure the loan. They work by borrowing a specified amount that needs to be paid within a specified time frame in installments.
One benefit of these loans is that you cannot just take them without much thought and this tends to restrict many people from getting them. They can be considered to be better than cash loans since they offer you a significant amount of money that can be used for investments. They are safer than cash loans, and their interest rates are lower.
The main drawback of personal loans is the length and complication of the application process. The lending institution needs to assess all your details such as your financial history and do an audit to ascertain how much you earn and whether you can repay the loan. If they do not get approved, they cannot give you money. They also require you to list collateral until the whole amount has been paid in full.
The details, advantages, and disadvantages of cash and personal loans have been listed, and while both can help you to get out of a sticky situation, it is vital to know the best one for your case. Cash loans are better for quick fixes that require some small cash, but personal loans are desirable for the huge problems that need lots of money.