There are a few different loans out there for the consumers
to consider when deciding if they need a loan, there are also other types of
lending finance to consider when applying for a loan and these include car
finance and credit cards, some people may confuse payday loans with instalment
loans and it is my job to work out the benefits of both products, the negatives
of both products and then move on and discuss the similarities between the two.
A payday loan is a short term loan borrowed by a customer as
a short financial way of borrowing and to be repaid within a thirty day period
on the customer’s next paydate. A payday loan should never be used as a long
term financial solution. Interest on a payday loan normally works out to be
between twenty five and thirty percent, payday loans are easy to obtain and
providing an application is successful a customer should normally receive their
amount in their chosen bank account within a couple of hours but in some cases
customers can receive their money within a few minutes. Payday loans are
normally granted and issued out to customers for amounts between £100.00 and up
to £1000.00
However an instalment loan is a more long term financial
need and solution for a customer, you can get instalment loans normally from
around £100.00 and up to £1,500 and anything up to £25,000 through some major
banks and other financial lenders. The duration for these types of loans are
normally between a few months and up to a number of years as chosen by the
customer. An instalment loan is a much more flexible payment agreement than the
mentioned payday loan product. It all depends on the financial lenders as
oppose to when funds should be received by the customer, in some cases
documentation is needed and it may take a few days to receive your funds where
as other companies can grant you the funds as agreed within a couple of hours.
I have found that the larger the sum that has been applied for the longer it
may take to be paid to the consumer. As an instalment loan is normally paid
over a much longer period the interest rates are normally lower due to the fact
that more repayments need to be made.
As I have described both the products I have to now mention
that they both have certain similarities, for example both can have high
interest rates so check thoroughly before deciding if a loan is right for you,
both can normally be paid out quickly to a customer but both may require forms
of documentation being received before the application can be successful. There
are a range of different payday and instalment loans out there and some cannot
be trusted so be careful, also with each loan potentially there could be
brokers involved so make sure you know what you are dealing with and that you
can make easier loan applications directly with certain lenders and avoid any
third party involvement. Also similar with both these separate products is the
approach to dealing with any outstanding repayments that may occur, both
products will have people chase the debt daily by making contact via text,
email and via the telephone on any contact information they have on a customer.
If repayments continue to be missed and are still remaining overdue then these
debts may be passed to outside sources such as debt collection agencies and if
repayments on payday loans or instalments loans are missed it will have a
negative impact on that persons credit file. And with any repayments and
defaults that show up on a customer’s credit file will remain on there until
the balance is settled in full and with these on the credit file it may be
harder to gain credit elsewhere.
A long with these similarities, there are many differences
between payday loans and instalments loans including the terms of the financial
agreement, a payday loan is considered as a short term loan that has to be paid
back within a thirty day period, this means the interest rates can be very
high, in contrast an instalment loan is meant to be paid over a much longer
period, the interest rates will not be as high but the loan will take longer to
be paid back to the specific Creditor. Another strong difference between these
two financial products is the customer service factor. It has been proven that
the customer service is of a much better standard with a longer term instalment
loan. It has also been proven that there are much more loyalty credentials with
an instalment loan for example once an account is cleared they offer more
benefits than a customer who has paid off a payday loan in full. There are a
lot more instalment loan finance companies that you can trust out there than
that of the payday loan industry, instalment loans have been around for a lot
longer and you know where you stand more with an instalment loan as your
repayments stay the same monthly and they are much easier to keep track of any
monthly instalments someone makes.
So in conclusion I have shown that both payday loans and instalment loans have their benefits as well as some negative factors, I must
however state that for me the instalment loan is overall the better option, it
is easier to handle your finances as the repayment is easy to work out and you
don’t have to clear the full balance within a month like you would have to do
with a payday loan. You may have the debt for a longer period but as it is
affordable repayments a customer has to make it is definitely the better option
for me. I feel that the payday loan industry is dying out slightly and with the
instalment loan currently the longest loan in the market place I also feel much
safer in this financial industry.
No comments:
Post a Comment