If you are looking for a short-term loan, it is important to understand the difference between a payday loan and a personal loan.
Payday Loans
A payday loan is a loan with a short term, but at a high cost. It is used by consumers who are desperate for cash to get them by until they receive their next paycheck.
In order to obtain a payday loan, you will be required to provide the lender with information regarding your employment and other sources of income. You will be asked to provide a post-dated check to cover the amount of the loan, plus an additional fee charged by the payday lender. This check will be deposited by the payday lender when your paycheck arrives in your account on your payday.
A payday lender usually does not check your credit score when you apply for a loan, so your credit score is generally not impacted. The downside to payday loans is that if you do not pay the loan in full when due, you will be charged with costly, additional fees and charges.
Although payday loans are an effective way to obtain money quickly, they are expensive. The high fees and charges that accompany payday loans often lead consumers into a long cycle of debt.
Personal Loans
A consumer can obtain a short-term personal loan that has a fixed interest rate and repayment period. When you apply for a personal loan, the lender will typically run a credit check which impacts your credit score.
If you are worried about qualifying for a personal loan, credit unions, local banks and credit card companies may have more lenient lending requirements. There are also online lenders, but you should research them carefully to confirm it isn’t a scam. It is wise to check your credit score before you apply for loans and research various lenders minimum credit requirements. You don’t want to apply for numerous personal loans because it will lower your credit score.
The attorneys at Fitzgerald & Campbell represent debtors all over the State of California in debt settlement, collections harassment and credit card lawsuits. If you have a matter relating to a debt you owe, contact us today by calling (844) 431-3851 for a consultation.