Nowadays, you can find many choices when borrowing money and paying it back quickly. Payday loans and short-term loans are among these choices. Payday loans and short-term loans are not foreign to people these days. Even though the terms are familiar, people still find it difficult to differentiate between short-term and payday loans.
The prime difference between a payday and a short-term loan is the number of repayment a person makes. Usually, people take around a month or two to repay their payday loans. On the other hand, you can pay your short-term loan back in two to twelve months. However, it is not always the case. You can come across many things overlapping between these products.
If you need some cash, short term loans are a solution for you to get back on your feet. The LoanPig is here to help you with your loan. The LoanPig enables you to get a short-term loan online, but they also help you with direct lenders if you cannot make it through them. Even when people have short-term and payday loans as options, they always shout out for alternatives.
Let’s look at the alternatives for payday loans and what makes them different from short-term loans. Let us start this discussion by knowing the substitutes for payday loans.
Alternatives to payday loans and prerequisite for it
You can use a payday loan for various purposes, like bridging the gap between your next paydays or covering any unexpected expenses. However, people want to know what they can do other than apply for a payday loan. The alternative for a payday loan includes –
- Getting a Credit union loan
- Using Credit cards
- Getting an Authorized overdraft
- Borrowing from friends and family
You can apply online for payday loans. It has a simple application process and can get the money in minutes after the loan approval. The application process for payday loans and short-term loans is almost similar. You only need to answer a few questions such as –
- Are you more than 18 years or not?
- Are you a UK resident?
- Do you have a British bank account or a debit card for repayments?
- Do you have a job and an earring for around € 500 or more per month?
- Do you own a mobile phone to contact you?
The lenders want to get an idea about your monthly expenses. With such information, they can ensure your ability to make repayments on the due dates. In many cases, they will get third parties to check on your employer and that you are on payroll.
The significant difference between short-term and payday loans
When you choose between payday and short-term loans, there are two crucial things you need to consider. The first one is the amount you need to borrow. The second one is the amount of money you want the lender to take out of your account while collecting the repayment. The shorter term you have to pay back, the less interest you will have to pay.
For instance, if you borrow € 100 as a payday loan and repay it in 30 days, you will need to pay € 124. On the other hand, for a short-term loan of € 100 for three months, you will be paying € 151.40.
Originally posted 2022-09-17 22:39:09.