Short Term vs Payday Loan

What are short-term loans?

Short-term loans with a high interest rate, or, as they are also called, “payday loans”, are usually issued in the amount of no more than $2,500 and have a maturity of 1 to 30 days. Borrowers, as a rule, pay short-term loans at a single time. Such a loan can be issued at the offices or on the websites of non-bank credit organizations, and funds are usually issued on the day of application submission.

A short-term loan is a quick and convenient way to get borrowed funds at the very moment when they are needed. Generally speaking, short-term loans are indeed issued at an increased interest rate, which is explained by the high costs associated with providing small amounts for a short period of time.

Why are short-term loans better than other types of loans?

A short-term loan is a loan, as a rule, up to $2,500, which is issued for a short period, up to a month. It is assumed that the client can return it from the next paycheck. This type of loan has many advantages:

  • no need to go anywhere. Just fill out an application on the online site, specifying your bank card, and receive funds for it.
  • very fast service. The decision to issue a loan is made by the system based on the data entered by the user. This happens quickly and without errors.
  • loyal terms. Anyone can apply for such a short-term loan – a student aged 18, a pensioner (up to 75 years old), a person without official employment and even with a bad credit history. MFOs do not require a certificate of income and from the place of work.
  • the opportunity to take out a small amount.
  • early repayment. By applying for a short-term loan, you can return the money even the next day, while no penalties will be accrued. Taking into account the fact that interest is accrued for each day of use, this is a great opportunity to save money.

Payday loans – what are they?

A payday loan is a term that refers to a small short-term unsecured loan issued by microfinance organizations. The issuance of such loans depends on the data on the previous salaries of the consumer and his employment.

Features of payday loans

These programs differ from classic loans in the high speed of transaction processing. You can get a loan without leaving home, via the Internet for 15 minutes. Loyal customers can count on automatic confirmation of applications. In addition to the high speed of issuance, fast loans have limited rates and terms.

However, each MFI has its own terms. As for the term, it does not exceed 30 days. It is in the interests of the borrower to pay off the debt quickly, because interest is accrued in an increased amount compared to consumer programs on a daily basis.

You can monitor the accruals in your personal account. As a rule, such loans are issued for 1-2 weeks before the paycheck. Such a loan helps to solve unexpected financial difficulties (to pay for medicines, car repairs, etc.).

How to choose a product quickly?

Dozens of payday lending companies offer fast loans in the USA. In order not to make a mistake with the choice, it is worth comparing the parameters of loans from different companies and reviews of borrowers in advance. This can be done on the information service, where financial institutions are located in the order of an independent rating. It is formed based on different parameters:

  • loyal requirements;
  • maximum amount;
  • overpayment;
  • license availability;
  • percentage of approval of applications;
  • the method of issuing a loan;
  • the loan term and so on.

The built-in filter on the portal allows you to quickly sort out unsuitable offers, select a program with the necessary parameters. It is important to keep in mind that many services do not issue loans, but are used an information resource. After choosing an MFI, the client goes to the official website of the company and signs up the contract online.