We can find several types of loans, although we will focus on seeing the main differences between payday loans and fast loans. For a small unforeseen or need we will opt for a quick loan while if we want to reform our house or buy a purchase we will look for a payday loan, what more differences do we find between a payday loan and a quick loan?
Differences between fast loans and payday loans
We could find more differences between fast loans and payday loans, but we wanted to highlight five: interest rate, linkage, purpose, amount to be requested and requirements. Let’s look in detail one by one:
The main difference is the interest rates applied to each loan. In payday loans, the interest rate ranges between 6 and 13% APR, while in fast loans the APR can reach up to 2000% in cases where the repayment of the loan is long term. Within the fast loans, we will have to differentiate the mini loans of the fast loans whose interest will also vary.
Actually, to know what we would pay month by month we will have to look at the nominal interest rate (TIN). The APR includes the expenses and commissions of study and opening, which will be made in a single payment in the first monthly payment. We can find loans at an interest rate 0, that is, we would only pay the expenses only once and the following monthly payments will be a fixed fee without interest.
In order to see the differences in interest rates, we will do so with two different loans: the Good Credit Loan and a quick loan. We have raised the following example: we request $ 2,000 to be returned in 12 months:
Quick Loan: The APR only offers us that we would pay in a $ 300 loan to be repaid in 60 days, but we could get an idea.
A representative example for the first fast loan: $ 300 to be repaid in 60 days. Interest and fees: $ 140.57. Total amount to be returned: $ 440.57; APR: 2,334.15%, fixed daily: 0.60%
payday loan: as we have commented, we will include the example of the Express Loan. This is a payday loan without interest (0% TIN), with an APR of 12.21% due to the opening and study fees that are 6% of the amount.
For a loan of $ 2,000 to be repaid in 12 months, we would pay a monthly payment of $ 166.67 plus the first installment of $ 120.
Although the links do not like anyone, many entities in exchange for certain links such as direct debit or payroll insurance. In this way, you can get bonuses in the interest rate, which is usually reduced by 0.25% or 0.50% depending on the links. It would not be a bad option if you do not have the payroll domiciled in any other bank, do not mind directing receipts or want to change insurance company.
Another feature that differentiates payday loans from quick loans is the purpose, that is, what we are requesting the loan for. The most frequent uses of mini-loans or quick loans in Spain are to get out of an unforeseen or a small need as well as consumption of which the final amount is unknown, in the case that it is a credit.
Basically, fast loans or credits are requested due to small imbalances in the economy and which we anticipate will be repaid quickly. While, on the other hand, payday loans have very different purposes. We will request a payday loan for a lasting asset such as a home renovation, the purchase of a vehicle or even the purchase of a home, although in this case mortgage loans will be used.
Amount to request
The third difference we find is the amount to request. Fast loans or mini-loans, as we have said, are mostly for small contingencies, have a maximum amount that does not exceed $ 5,000 in many cases while payday loans usually reach $ 60,000
In this case, the positive point would be taken by fast loans since they do not usually have more requirements beyond having a payroll. The study of your concession will be quick and the money may be available in a few minutes in your account. In the case of payday loans, it will be necessary to justify in detail what the income is and the approval system may take approximately a few days. Although it may be a counter to payday loans versus fast loans, all factors must always be taken into account.