When you’re looking for a means of credit to fund an upcoming expense, two types of financial loans will spring to mind – fast cash loan or a personal loan. Choosing out of the two can be extremely difficult as both loans come with their own set of advantages and disadvantages. And understanding exactly what you need the money for; whether it’s to travel overseas, paying for your big day or a financial emergency, all play an important role in determining which loan is right for you.
Fast cash loans and personal loans are often confused with each other as the same thing, but both have their own distinguishing points to be aware of. Depending on your desired loan amount, how much you can afford for repayments and what the loan is for – here’s both sides of the two options to determine which is best for your needs.
What Are Fast Cash Loans?
Typically an fast cash loan amount will range from $100 to $1,500 on a short term payback basis. Fast cash loans are usually very quick to obtain because it’s simply a pay advancement, meaning there’s not normally a full credit check and the loan is unsecured. Repayments coincide with your pay day – so you’ll be expected to pay back the loan immediately after your next pay cheque.
The Benefits of Cash Loans
The biggest benefit of fast cash loans is the application process. For those in need of a quick and easy cash advancement, fast cash loans can be put into your account within 24 hours of approval. Because the loan amount is never too much, paying back the loan is manageable for most borrowers.
Fast cash loans have usually been favoured in the past over credit cards and personal loans because of their flexibility. There’s less restrictions in the way you spend your loan, it’s more convenient than dealing with the bank and they’re super easy to qualify for. Once you have built up an loan track record with the lender, some will gradually increase the amount of cash they will lend you at a time. This means emergency funds will almost always be available to you should you need to borrow again in the future.
The Drawbacks of Cash Loans
Despite the benefits of fast cash loans, they do get a pretty bad rap. Knowing how to apply the right way for a loan and ensuring you have the means to pay it back in time can be all the difference between a successful loan to one that isn’t. Like with any financial agreement though, you need to be fully aware of the drawbacks before you commit.
Fast cash loans can have a high interest rate in comparison to major banks and building societies so it’s essential to look into the fine print first. If you don’t pay back your loan amount by the due date too, you’ll get swamped with additional fees and charges. To avoid the cash loan drawbacks; it’s imperative to consider your loan situation carefully, do your research and know your money limits. Opt for a company that’s transparent with the fine print and need-to-know information to avoid being the target of fluctuating prices or additional fees that can easily add up.
What Are Personal Loans?
Personal loans are through a bank or credit society and are designed to suit a borrower wanting to loan a higher amount over a longer term period. This type of funding is better suited for big ticket items, like mortgage repayments, wedding day, holidays or investment opportunity. Larger credit facilities (up to $100,000 generally) like personal loans can be secured or unsecured. Secured loans have lower interest rates as borrowers are less risky to the bank. If you can’t make the repayments the lender will repossess the goods you purchased with the loan and sell to recover the borrowed funds. With unsecured loans, the rates tend to be higher because there are no assets securing the loan. If you cannot make the payments, you will have to default on the loan and this is likely to affect your credit score.
Personal loans work by borrowing an agreed amount to be paid back within a stipulated time frame. Comprehensive credit checks are run and the approval can take time. Credit specifications are set within a strict financial contract.
The Benefits of Personal Loans
Unlike credit cards, there’s no way of adding to a personal loan with impulse purchases and ‘emergency’ situations. For many, this is why personal loans are ideal as credit cards can certainly be risky for those with bad spending habits. Personal loans can be more beneficial than speedy cash loans when you are wanting to borrow a larger sum of money or need longer to pay it off and often have lower interest rates compared to credit cards.
Generally secured loans are a safer option when it comes to personal loans and these will have lower interest rates.
The Drawbacks of Personal Loans
Unlike fast cash loans, which will almost always have the money in your account on the same day, personal loan applications are a lengthy process. The lender will take your financial history into account and conduct a comprehensive audit into how much you earn and your credit file. If you don’t get approved, or have been denied in the past, this will go against your credit history making it harder to get a personal loan in the future.
Secured loans will require you to surrender something of value which becomes collateral until the value of that item has been paid back. On the other hand, unsecured loans won’t require anything to be handed over but the flip side is the interest rates can be very costly.
Whilst both loans can certainly help ease a stressful financial positions, it’s vital to weigh your options up wisely to reduce additional costs and pressure. Whilst personal loans do offer small loan amounts too, fast cash loans can be a quick and easy solution to a small and management financial problem and very effective – if you stick to your agreed payment date. Regardless of what loan you choose for your needs, make sure you get the right financial advice before you apply for anything.