Personal loans have been available from online lenders for some time, but until quite recently, short term loan was the only real option. Today it is possible to get what is termed an installment loan as well, which is much more similar to a traditional bank loan in nature. To help you decide which type of loan would benefit you most we will look at them in turn below.
The Payday Loan
If you conduct a search for online loans you will normally be presented with a list of websites from payday loan lenders because this is the type of loan that most people need. Personal loans of this nature have the following characteristics:
- Small borrowing amounts, normally ranging from $50 to $750.
- Short term lending criteria i.e. you are expected to repay the amount borrowed and the interest charges from your next paycheck.
- Fast online loans approval without the need for a credit check.
- Instant cash deposit into your chosen bank account.
A lot of lenders put a maximum borrowing limit in place for the first few loans taken out, and it restricts the amount you can borrow. Repaying the loan on time and in full increases the amount available to borrow though, meaning you can ask for more substantial amounts in the future.
The Installment Loan
installment loans are exactly what they say they are – quick loans online that you repay in a set number of installments. Personal loans of this type work in the same way as a short term loans but you don’t need to pass a credit check to be approved. The characteristics of an installment loan are as follows:
- Larger borrowing amounts.
- Longer repayment options. The minimum number of installments payable is normally three while the maximum is 60. More often than not you get to choose the number of installments you need to repay the fast cash loans.
- The same fast approval and instant cash deposit into your bank account as with a payday loan.
The interest rates on substantial personal loans online are often lower than those of a bad-credit credit card, easily making them the better option for large expenses, major purchases or even business start-up costs.