What Are The Differences Between A Payday Loan & A Short Term Loan?

What Are The Differences Between A Payday Loan & A Short Term Loan?

Payday loans and short term loans are very similar, hence why they seem to get mixed up or understood as the same thing. Although, there are actually plenty of different ways which make these two very different from each other. But, unless you are looking to apply for a loan, you may not understand what keeps them apart. Therefore, we have put together some of the most important information to help you get a better understanding.

What are payday loans and short term loans?

Both payday loans and short term loans are used for similar circumstances. They are both available to provide emergency financial help to those who need it.  For example, if your car breaks down or your boiler needs repairing, a smaller loan like a payday loan is easier to find, be approved for, and manage than the majority of other types. Here at LoanPigUSA, we can help match you to a lender in your state who suits your needs. Although the two types of loans are typically used for the same reasons, there are plenty of differences too.

How long do I have to repay?

Payday loans and short term loans are very separate when it comes down to the repayment. When you borrow a payday loan, you are expected to repay the loan with your following paycheck., hence the name. This means that the loan will last around 1 month altogether. Whereas with a short term loan, the repayment period can be any time between 1 and 12 months. So, when you borrow your loan you are able to spread out the repayments, allowing you to easily take control.

There are pros and cons to both of the loans. Some people prefer payday loans as they offer a quick solution to their issue and once they have repaid that’s it. But on the other hand, others prefer short term loans as the amount is spread so it is easier to repay over the course of the scheduled repayment dates.

How much can you borrow?

Typically, you can borrow between $500 – $2000 depending on the lender for either payday loans or short term loans. But, due to the different repayment durations, it will depend on your personal money management and income when deciding how much you can borrow. As payday loans tend to have one repayment, it will be difficult to repay the highest loan amount. Whereas if you were to borrow the highest amount using a short term loan, this will be easier to manage.

How can you apply for a loan?

Here at LoanPig USA, we work with lenders all over the country to provide for those who need that extra boost. Applying through our website is simple, you can find more information on the home page. Although, before moving any further please ensure that you have read whether or not loans are legal in your state, click here to find out.