Surely not many people understand the difference between bank credit and a personal payday loan and it is often thought that both are only synonyms, but this is not the case. Both have remarkable differences and are aimed at different people with diverse needs and purposes.
It is important to choose the right one for your situation or difficulties could arise because you have not been clear about the best option. It is for this reason that in this post we will explain each one.
What is bank credit and personal payday loan?
Bank credit and personal payday loans are financial operations where an identity gives the client the confidence and monetary support he needs. Of course, the individual receiving the money must commit to return it and also pay an interest. The person must give a guarantee of income or assets for the bank to grant the credit. This entity will always be monitoring how viable the user’s ability to pay is and thus decide whether it is convenient to approve it or not.
The financial company will also keep in mind the purpose for which the numerary is being requested. Since it will not grant a huge amount of capital to buy something economical. This is why banks often require an explanation regarding the application of the loan or credit and after being approved they tend to request an invoice to ensure that the money was used precisely for what was required.
The bank when granting the procedure will grant a detailed offer with all the conditions so that the client is the one that finally chooses. Here you will see the deadline and fees to be paid. It is important to be aware of not accepting a loan with high commissions that end up making you pay much more money than you requested. You must also ensure that the number of installments does not exceed the life of the product you are going to buy. No one wants to continue paying for something that is already unusable.
Difference between bank credit and loan
The difference between these two is very simple and clear. The individual requesting a loan obtains an undetermined amount of money and interest will be charged according to what they spend. In other words, the entity places a limit on the amount of capital that the client can spend, but does not deliver it at once. The user uses it according to the needs that arise in personal economic matters. A clear example widely used among this type is the well-known credit card. This has a limit and only interest is paid for the funds used in it.
In addition to interest, a commission is charged on cash not spent, but there is nothing to worry about since it is minimal and practically not noticeable. The user as he returns the money may have it again and its term is generally one year, but this may vary depending on the conditions of the service. This credit can also be renewed for a term equal to the previous one.
Bank credit is usually requested to face those times when money is needed, and not to waste it.
On the contrary, when a person requests a loan, he receives an exact amount of cash at the beginning of the operation and must pay the interest for the entire money. This cash back can be made in installments that will depend on what is agreed with the financial company. There are also fast loan terms which are too short and can be up to 60 days, but generally 30 days. There are also the longest that are usually 13 to 90 months.
Loans are more common to apply for when you want to make a specific purchase such as a car or a house and the return of money is usually monthly. It is even said that the most common is the so-called mortgage. Likewise, both interest and debt must be paid. There are people who wonder if the loans are renewed but the answer is no. However, the service can be re-contracted.
What is more convenient between bank credit and personal payday loan?
Determining which one is best for each person will depend on what you want to do with the money. If what is needed is to make a purchase immediately of some good as a house, it is more advisable to ask for a loan since the money is obtained at once. While the credit is more advisable to make several purchases with scales not so high. It is mostly suggested for companies since there are situations in which merchandise must be bought or cope with a small drop in revenue.
It is always important to keep in mind that it is exactly what both services offer. Including commissions and payment obligations since at first sight it could be seen as a great option, but in the long run it may bring you more complications than the problems you solved at a certain time.
Formalization of credit or loan
Whichever you choose, it is essential to make sure it is formalized. Since these must be added to an agenda or checking account that is operational in the name of the requesting user. In addition, the payments of the monthly installments and the total payments of the credits will be scheduled. It is an essential step that cannot be ignored when acquiring the service to keep a good record.
It is important to finish this procedure formally and signing the appropriate papers. Always being aware that the documents have the appropriate terms since this can have judicial influence if they are not fulfilled. In addition, it must be a fair treatment for both the entity and the individual requesting and both must meet all conditions to the letter.