Payday loans versus secured loans with real estate or vehicle can be used for anything you want. Maybe you’re wanting to fund a wedding party, go to Disney and Universal on your family vacation, pay for plastic and aesthetic improvements, buy new furniture for the home or even consolidate all your debts into one.
If so, an unsecured payday loan, or a secured loan can meet your needs easily. But when looking at a secured home loan loan versus payday loan, which one is better? The answer will depend on your unique financial situation.
What is a payday loan?
A payday loan allows borrowers to borrow money without having to put up collateral. Also known as an unsecured loan. Payday loans are attractive because the interest rates are typically lower than with a credit card. The amounts released on payday loans range from $ 300 to $ 100,000, depending on your income and economic profile. To qualify for the best interest rates, you need to have a good credit and clean name.
What is a secured property loan?
A secured loan with real estate is a loan that allows homeowners, apartments, sites, etc. to lend money giving the good as collateral. The amount of capital released depends on several factors and policies adopted by banks and institutions that offer this type of credit modality.
While home equity loan interest rates (1.15 to 2%) are typically lower than payday loan rates (between 5% and 18%) you need to own a home foreclosure or vehicle to qualify. In addition, the amount you can borrow is limited by the lower valuation, keep in mind that the borrower will only get approximately up to 85% of the equity value.
Unsecured or secured loan, which is the best?
Do you need the fast money? A payday loan can be approved the same day you sign up and you can usually have your money between D + 0 and D + 3. A secured home or vehicle loan, on the other hand, can take much longer. In the application and evaluation process you will need to submit income documents, tax returns, have the house appraised, and approval may take a month or more.
How much money do you need?
If you need money between $ 1,000 and $ 25,000, a payday loan may be the right one, lenders do not always want to handle secured loans for small amounts (although the minimum value varies from lender to lender).
If you own a home free of dollars and are in need of a large amount of money, a secured loan may be your best bet, since the fees are generally lower and the interest payments can be deductible.
If, however, you just need to borrow a small amount of money or you are a new homeowner with financed property, a payday loan may be the best option for you. Whatever your decision.