Loans are sums of money borrowed from a financial institution to help one in monetary difficulties. There are various types of loans available like; personal loans, payday loans, secured loans and unsecured loans.
A payday loan is like a personal loan, but with some important differences. Usually payday loans are paid off in one lump sum to the person requiring money. You can get the required money very quickly; in fact, if you have submitted all the required documents, the loan is sanctioned within a few minutes! Actually, payday loans are best for people needing money for emergency situations; provided the required money is small. A payday loan is usually only for amounts from $100 to $1000; but the interest rates here are quite high. In fact, the lenders charge about $15 to $25 per $100 borrowed, and the amount has to be paid on the next payday. So before actually taking on a payday loan, check the interest rates of the various lenders as different lenders give different rates. Usually a cheque is submitted as security to the lender, which he encashes on the next payday. If required, the loan could be extended to subsequent paydays for a fee, but this is not advised as it turns out to be quite expensive.
However, in the case of personal loans, you cannot avail the loan amount quickly as you have to go through a normal loan process that takes from 1-2 weeks or more. However, the advantages here are that you can avail larger amounts of money here from $1,000 to $10,000; with loan payment time extended for 1-5 years. You are given a lump of money as a loan, and you have to repay this amount by making regular payments, usually monthly, to the financial institution you had borrowed it from. This form of a loan is advised if you have a number of debts you wish to consolidate into one loan. However, as there are several banks and financial companies that offer personal loans, you have to shop around for the institution that gives the best rates. The lower the Annual Percentage Rate of the loan, the less interest you have to repay, making the loan cheaper.