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Difference Between Payday Loan & Personal Loan

By Finserv MARKETS - Sep 3,2019
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Differences between Payday & Personal Loans

Large expenses can take a toll on your finances. Therefore, instead of liquidating your years of savings, you can consider availing a loan to meet your financial requirements. Two of the most popular credit products for availing instant funds are payday loans and personal loans. Let us understand the details and the basic differences between a payday loan and personal loan:

What is a Payday loan?

A payday loan, also known as a “cash advance loan”, is a small, short-term unsecured loan. Payday loans have minimum eligibility criteria and thus, it is possible to avail payday loan even with a low credit score. The laws regarding payday loans vary from one country to another. In India, it is possible to avail payday loans with some of the leading Non-Banking Financial Companies (NBFCs). There are various online lenders that provide payday loans.

One of the major concerns while availing a quick payday loan is that these loans come with higher-than-usual interest rates. However, if the loan is repaid before the due date, the interest rate won’t matter much. Therefore, instant payday loans should be availed only by those individuals who can repay it on time.

Benefits of payday loans

The money obtained through payday loans online can be used for anything, including short weekend getaways, managing household expenses, paying for car repairs, etc.

A payday loan also provides the advantage of private transactions. It doesn’t affect the credit score of the borrower. On the other hand, a conventional loan becomes a part of the borrower’s credit history.

The application process of payday loans is very simple and can be completed in a matter of minutes. Minimal documentation and quick disbursal are some of the other added advantages.

Though online payday loans are easily accessible as compared to any other type of loan, you should be really careful in choosing the loan-provider. Make sure you check the authenticity of the lender before opting for it. You must be very selective in choosing a legitimate payday loan lender.

Personal loan

Personal loans are multipurpose unsecured loans. These loans are one of the most popular credit products amongst working-class professionals in our country. Leading financial institutions offer personal loans with various attractive features. Let us have a close look at some of the features of a personal loan.

Easy Personal Loan online application

Availing a personal loan is no longer a time-consuming and tedious process. Due to digitization, borrowers can apply for a personal loan online from the comfort of their home. They can also upload the required documents online. Post verification of documents, the personal loan is approved and the loan amount is disbursed within a short span of time. This hassle-free application process has further enhanced the popularity of personal loans.

 

Personal Loan EMIs can be calculated beforehand

With the help of an online personal loan EMI calculator, borrowers can calculate their monthly installments beforehand. This can help them plan their expenses in a better way and make timely repayment of their personal loan.

Attractive personal loan interest rates

Financial institutions are willing to offer attractive interest rates on personal loans. Moreover, a good credit score can help the borrowers avail a higher loan amount at a reduced interest rate.

Personal loans help in boosting credit score

If you avail a personal loan and repay it on time, you can enhance your credit score easily. Maintaining a good credit score can also increase the chances of your loan approval in the future.

While availing a personal loan, it is advisable to compare various loan offers provided by different financial institutions. This will help you avail a personal loan that best suits your needs. A Bajaj Finserv Personal Loan comes with attractive personal loan interest rates and other features such as less processing fee, quick approval, and instant disbursal of the loan amount.

Read about how to get a personal loan with low CIBIL score and also check your eligibility for personal loan with Personal Loan Eligibility Calculator.

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment, and exclusive EMI store, all under one roof- anytime, anywhere!

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522