Installment loan or payday loan – which is better?
The non-bank loans market has undergone major changes in recent years. Loan costs have decreased significantly, and loan companies have started to apply responsible lending.
The non-bank loan has become an attractive solution for obtaining additional cash, e.g. for the purchase of a new computer. However, to make the selection of the offer accurate, we advise you on how to choose a loan wisely.
What to do when you suddenly need money?
Situations where there is a shortage of cash usually come unexpectedly. A broken car or equipment failure requires a lot of cash. Not everyone can afford to cover these costs with their own pocket. Often, it is also not possible to save quickly the amount needed.
In such a situation, more and more people use financial products offered by non-bank companies. They are becoming more and more popular because they can be obtained very quickly and the formalities that need to be taken care of are simplified to a minimum.
That is why the competition on the non-bank loan market has been steadily increasing for several years. Companies compete in promotions and new ideas to attract customers. In addition, loan companies want to improve their image, which is why many of them decide to implement good practices and take care of the client’s financial security. Thanks to this, online loans have become a quick and safe way to get extra cash.
When planning to make such a commitment, it is worth checking whether a non-bank loan can be secure.
Non-bank loan – when you need quick money
A non-bank loan is a solution dedicated to people who urgently need cash. This is a product for customers who cannot wait a few days to obtain a positive decision at the bank. Depending on the type of non-bank loan, decisions and withdrawals are expected to last from 15 minutes to a maximum of 24 hours.
More information on installment loans in 15 minutes can be found in this guide.
Non-bank loans are a financial product that comes in two main varieties: installment loan and payday loan (short-term loan). The main differences between them are in the amount offered and the method of its return. In the case of payday loans, smaller amounts can be borrowed, and the loan must be returned once after 30 or 60 days. In turn, installment loans mean larger amounts and a method of repayment in equal installments over a period of usually up to 3 years. The type of loan should be individually adapted to your options, taking into account the above criteria.
Is an installment loan better than a payday loan? And if so, why? We will answer this question in the article Why the installment loan is better than a payday loan.
When choosing a loan, it’s worth using comparison websites and calculators. Thanks to them, you can quickly see which non-bank loan will be the cheapest. When choosing a loan company, it is good to check whether it applies the principles of responsible lending, what are the opinions about it, and whether the company is not on the list of public warnings by the PFSA.
Principles of quick loans as proof
A loan for proof is a very capacious password. People who are looking for such offers have different financial products in mind. Some are looking for loans, for which you only need an ID card. Others mean loans without certificates or without credit check.
Indeed, an ID card is often the only document needed to get a quick non-bank loan. The loan procedure is fully online. Log in to the lender’s website, complete a short application by entering your ID details, e-mail address, cell phone number, and bank account number.
Then, the applicant’s identity will be verified (using a verification transfer or by logging in to the bank’s website or using a dedicated smartphone application). You must submit a declaration of income (in most cases you do not need to submit any certificates). And that’s it. Now all you have to do is wait for the lender’s decision, which, in the case of payday loans, takes up to 15 minutes. Always read the content calmly and thoroughly before entering into a contract. If any doubts arise, always clarify them with the consultant.
You can also get a loan by phone by selecting the identity checking methods described above. If the applicant does not have a bank account or Internet access, he can use the solution which is checks. Thanks to them, the granted loan can be withdrawn at the post office, and the postal clerk will check the identity of the borrower on the basis of his ID card.
If someone identifies the password loan-proof ID with a loan without credit check, they may fail. Most loan companies examine the credit history of customers not only in their internal bases but also in such registers as credit check. This is because companies need to assess the risk of borrowing money. And also to protect customers themselves against unreasonable financial decisions (debt spiral).
A quick non-bank loan or installment purchases?
What to do against a dilemma non-bank loan or installments in the store? To decide which solution is better, you should always analyze the costs of both solutions. Online Payday loan seems to be a solution dedicated to sudden but rather rare situations in which you need to improve your budget.
Often you can find promotion and take advantage of a completely free first payday loan. This is a great solution, provided that after 30 or 60 days, the borrower has something to pay back. If it is too short to collect the entire amount, a non-bank installment loan seems safer.
Stationary and online stores offer purchases of their products in installments. This is another option to consider. When deciding on such a solution, the buyer signs a loan agreement with the bank, the store is only an intermediary. The cost of a bank loan will probably be lower than the cost of a non-bank loan. 0% installments are very tempting. However, for these promotions, you should ask for all the details carefully. Magical 0% sometimes only applies to interest and the cost of credit increases after adding e.g. mandatory insurance or commission.
You can find more practical information about shopping in installments on the internet in this article.
Summarizing. Before resolving the dilemma which financial product to choose, it is necessary to compare the bank’s offer and the offer of the non-bank company. The scale of the decision may be tipped over by costs, but also by formalities and the waiting time for the decision.