Many people perceive same day payday loans and regular or traditional loans to be the same. While a regular loan can be a life saver to someone who is in dire need of money, it can also become an additional problem rather than a solution if you deal with the wrong financial institution. For one thing, obtaining a regular loan is not that easy, and the requirements to get approval are aplenty. Many people perceive same day payday loans to be the same. In reality, there are major differences between a regular loan and a same day payday loan. Here are some of the things that differentiate the two.
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Application Process
One of the major differences between the two is in the application process. In regular loans, such as those offered by banks, you are required to personally visit the bank or financial institution to apply for a loan. On the other hand, financial institutions that offer pay day loans process loan applications online. All you need to do is fill out an application form and send the requirements online and the financial institution will process your application right away.
Approval Process
Since the loan application is done online, you can expect fast approval of your loan. Usually regular loan applications are approved in 3-5 business days, depending on the lender. The approval process may even take weeks or months, depending on how much you intend to borrow. On the other hand, the payday loan approval process only takes less than 24 hours. After you fill out the application form on the lender's website, all you need to do is to wait for the notification on whether your loan application is approved or not in 24 hours. Some lenders even approve loan applications in as fast as less than two hours.
Approval Rating
The approval rating in payday loan applications is also comparably higher than in other types of loans. This is because there is only one major requirement you have to comply with if you want to obtain such loan, and that is your capacity to pay. Unlike in regular loans that require borrowers to have a good credit rating, you don't need to have a good credit history to get approved on this type of loan.
As long as you can prove that you can pay your loan, that you are at least 18 years old, and that you have an active bank account, you can most likely get fast approval on your application. After the loan application is approved, the funds will be directly deposited to your bank account.
Payment Process
Another major difference between the two is in the payment process. Regular loan payment process is much more complicated as compared to that in a same day payday loan. To pay your regular or conventional loan, you may need to personally visit the lending institution, although some banks already now offer other payment options such as online payments. On the contrary, some lending institutions coordinate with the company you are working for. Your company will pay for your loan and will deduct the amount you borrowed and your loan interest from your next salary. Some lending institutions also allow online payments so you don't have to personally pay for your pay day loan.
Interest Rate
The interest rate of this type of loan is comparably higher than of a regular loan. However, considering the convenience and quick processing in this type of loan, the difference in interest rates is all worth it for many people.
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