There can be several types of personal loans. These include cash loans and payday loans. When you apply for personal loans, you will be asked which type you wish to take out. While the requirements to take out such loans are similar, there is a difference between these two. Cash loans do not refer to a specific purpose. Payday loans are based on your salary every month.
The amount of loan you can be approved of for payday loan is dependent upon your monthly or annual income and other factors such as existing debts. Your existing debts are considered because trusted online lenders do not wish that you compromise your other financial obligations. One purpose why there are unsecured or bad credit loans is to help you improve your FICO score. They want that you will be able to perform all your financial obligations so your standing will improve and you will qualify for regular loans offered by banks and lending companies.
The same can be said of cash loans. When you apply for cash loans, your current financial conditions are considered together with your other financial obligations. However, unlike the payday loan, the amount of loan you can avail for cash loan may be higher and the terms of payment are more flexible.
No Credit Check
Cash loans can be unsecured. Your FICO score is a decisive factor in applying for loans from banks and credit unions. The moment you expressed your intent in applying for a loan, a staff will then access a database of credit scores. They will study and analyze how you handled the previous debts. Your performance is measured by a three-digit score. The margin is 640. If your score is below this figure, it is considered a poor rating and your application will not be processed because banks and other traditional lending companies deem that they will be risking their money in lending you as you will not be able to pay back.
Fortunately, if you have a poor rating, there are cash loans especially offered for borrowers with score below 640. Online lending institutions that offer these loans would not check your FICO score when you apply.
Unlike banks, credit unions and other traditional lending companies, online lending institutions will also not ask you to present any security for the payment for your loan. They believe that you deserve a second chance, and that second chance may even be used to improve your credit score.
Quick Processing – Instant Release
With the traditional lending institutions such as the banks, the loan process is usually long. The process involves getting your FICO score, assessing your present income, and appraising your collateral to secure payments. In contrast, online lenders have a short processing. They do not require anything to pledge as security. When you fill out a form, comply with the requirements, your application is processed immediately. When the lender is satisfied with your requirements, your loan is approved, and the money is released—all of these can be completed on the same day.