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Bank Loan vs. Payday Loan

February 16, 2007

Which one should you use?

Ah yes, it’s that dreaded “L” word that some people hate to say. I’m not talking about “L” for “love”, but it’s actually “L” for “loan”. Aside from those who are filthy rich, anybody “qualified” for a loan has one.

Whether it be for a car, real estate, home appliances, electronics, etc… we can get a loan or get something financed for pretty much anything these days. The question is, which loan should you use; a bank loan or a payday loan? Well, it all depends what you want to use the loan for. Let’s define these loans, shall we?

First of all, what do they have in common? Let’s start with the obvious; you must apply to qualify. That’s actually it for that list.

So, how does a bank loan differ from a payday loan? A bank loan usually takes anywhere, from a couple of days to, a week to process, but you can get a payday loan as early as the next day. A bank loan strongly relies on your credit history for approval, yet a payday loan only requires you to have a job to get approved. A bank loan is usually long term, but a payday loan is short term.

Now, let’s get into how these loans are used. Bank loans are a much greater investment, usually used to purchase vehicles, real estate, or business investments. We’re talking big dollars, which range from $1000 to pretty much infinity. As long as they think you can pay them back, they’ll give it to you.

On the other hand, payday loans are used differently. Let’s go through a couple of scenarios: You’re one month behind on rent. If you don’t pay by the end of the week, you’re out of there! The kicker is that payday isn’t until next week. You can easily solve the problem by getting a payday loan.

Your car broke down, you have no cash, you have a hot date with your dream girl or boy on Friday and you don’t want to use your parent’s ’69 station wagon. That’s when a payday loan comes in handy. Basically, if you need cash fast, get a payday loan.

So, when thinking of applying for a loan, it all depends on what you’re using it for and how urgent you want the cash in your account. For big loans, think a bank loan. But for fast cash, think of payday loan.

by Sasha Devison

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