There are basically two types of loans: secured and unsecured. Loans that require a collateral are categorized as secured loans. In these loans, borrowers are usually required to present a valuable asset as collateral and in the event that the borrower fails to pay back the loan, the lender can seize the asset. On the other hand, the unsecured loans require no assets as collateral, although some lenders require certain borrowers to secure a co-signer. Payday loans usually fall under the unsecured loans as most lenders offering such loans don’t require borrowers to present a collateral.
What You May Want to Know About Payday Loans
Although the term payday loans is popularized only a few years back along with the emergence of the online industry, payday loans are actually not new. In fact, traditional lending institutions such as banks have been offering payday loans. These loans basically are short-term loans that are usually paid on the borrower’s next payday, thus the term. In other words, payday loans have a repayment period of days to a month.
Today, these loans are also offered by online lenders. The repayment term remains basically the same—from days to a month. However, these days, obtaining payday loans has become so much easier. Still, no collateral is needed to take out payday loans but the application has become faster and more convenient for borrowers. Through online lenders, borrowers don’t have to personally submit the application at the lender’s office and don’t have to go through embarrassing interviews with a loan agent. You can discreetly apply for such a loan from home or from anywhere, through the lender’s website.
What’s more, lenders will not even look at your credit rating. Regardless of your credit rating, you may be eligible for a payday loan as long as you can show proof to your lender that you have the capacity to pay your loan back. In other words, the main requirement that you should comply with is to have a source of income.