Payday loans are certainly different from conventional loans. For one thing, you are required to repay the amount you borrowed within a shorter span of time, usually until your next payday. So because payday loans are short term loans, lenders will usually lend money without making a credit check on borrowers.
This is in contrast to banks and other finance companies which lend money only to applicants and borrowers who have a good credit rating. So for people who have bad credit, payday loans offer a much needed alternative to conventional loans.
Another difference between payday loans and traditional types of loans is the rate of interest. The interest rates on payday loans are typically higher simply because of the payday loans are considered relatively risky. This isn’t surprising considering how credit checks and other processes are not used by payday lenders. Consider these issues carefully in deciding between payday loans and traditional loans.
| January 27th, 2012 | Posted in Personal Finance |