If you need urgent cash, you may be considering a signature loan. A signature loan is a pretty good way to get some extra cash when you need it, but it’s not always the best option.
In this article, we will provide you with more information about signature loans and payday loans, and help you determine which option is right for you.
Learn about signature loans
Signature loans are exactly what they sound like. You only need to sign to get a loan, usually up to thousands of dollars. For example, unlike car ownership loans, you do not need to provide any collateral. Then, the loan will usually be repaid monthly according to your loan agreement.
Basically, a signature loan is a personal loan. Since collateral is not required, signed loans usually have a higher interest rate (APR) than loans secured by collateral, but if you need cash, it is still a good choice.
However, the biggest benefit of a signature loan is that you need a pretty good credit score to apply. The higher your credit score, the more likely you are to be approved-because the lender will not think your loan is risky. Conversely, this means that you may not be able to obtain a signature loan if you have a poor reputation.
A payday loan is another type of emergency loan. It is designed as a very short-term loan to provide you with emergency funding for several weeks until you can move on to the next payday. Most payday loans must be repaid within 2 weeks (in some cases, up to one month).
Just like a signature loan, you don’t need to provide any collateral for the loan. However, payday loans do not require traditional credit checks. This means that you can be approved even if you have a bad reputation. However, this also means that payday loans usually have higher interest rates than signature loans.
Should I get a payday loan or a signature loan?
It depends on how much money you need, how fast you need it, and what you need. Generally, if you need quick emergency cash for a variety of reasons, a payday loan is a better option.
If you don’t need to use cash right away and have a good credit score, a signed loan may be cheaper in the long run. However, if you need urgent cash immediately, a payday loan is your best option.
Know which loan is right for you!
Payday loans and signature loans have their own advantages and disadvantages-but if you need to get emergency cash quickly, it is difficult to overcome the convenience of payday loans. Do some comparison shopping between the two and you will definitely make the right choice!