Applying For a Payday Loan Vs a Pawnshop Loan
A payday advance loan is a short-term, high-interest, no-fax cash advance for a specified amount that is intended to be paid back with the next paycheck of the borrower. Payday loans are usually made to those who have poor or nonexistent credit and require fast money to make ends meet. If you’re one of the millions of Americans who are payday loan dependent, know that you are not alone: payday loans are backed by aggressive loan sharks that will do almost anything necessary to get their money from desperate borrowers.
Payday loans are not regulated
in any way by government agencies and are not governed by any federal laws or state codes. Therefore, consumers in need of quick cash will not have any protection if the lender goes into default or engages in illegal behavior. In fact, payday loans are not legal in many states, including California, Connecticut, Delaware, Florida, Hawaii, Illinois, Louisiana, Maryland, Massachusetts, Montana, Nevada, New Hampshire, Oregon, Utah, Virginia, and Washington. Although some states, such as Illinois, ban the sale of payday loans, others allow it.
When consumers need money fast
and they are desperate, what they really need is fast cash – but without collateral. Payday loans are short-term loans, which means the only collateral a consumer can possess to obtain one is the title to their first home. Title loans are offered in all 50 states and can be very affordable and convenient. Although the interest rates on title loans are extremely high, the convenience and low cost of the debt is a huge bonus for consumers. Unlike other forms of debt consolidation, most title loans are granted without credit checks or collateral requirements. Consumers who are facing the threat of a foreclosure on their home should take advantage of this affordable source of funds.
Many individuals wonder how the lenders
come to know that borrowers qualify for payday loans. When borrowers apply for personal loans, lenders use a complex formula to determine borrowers’ eligibility for the loan. These complicated and costly formulas are designed to prevent the subprime loan from being given to a borrower with a bad credit history. Instead, if borrowers have good credit, personal loans may be given to them. However, even with good credit, borrowers can still be approved for a payday loan.
To qualify for a payday loan
borrowers must have a job, which typically requires borrowers to have a verifiable income. Even with a job and a verifiable income, sometimes a payday loan lender will still deny the application of a borrower who has bad credit because of the risk involved with lending to those with bad credit. Because of this risk, payday loans are only given to borrowers who have a good enough credit score to qualify.
Payday loans and personal loans are two very different products
While there are similarities in their requirements and interest rates, payday loans often carry higher interest rates than personal loans. This is because payday loans are not “checked” by credit card companies as personal loans are and because payday loans often require the borrower to have collateral in the form of a job or other assets that can be seized in the event of default. For this reason, if you need to take out a loan quickly, you may want to consider applying for a payday loan instead of a personal loan. Payday loan lenders usually do not check your credit, and they offer lower interest rates than pawnshop loan companies.