Whether you’re planning a new kitchen, some new furniture or thinking about a loft conversion, a loan could help you get the most out of your property sooner rather than later.
If you are looking for a loan, you might be wondering if you should get a same-day loan or the personal loan. These loans involve borrowing money from lenders and repaying them via instalments, but they have quite different terms.
Same day loan is a type of loan delivered to a borrower’s bank account on the same day the application is received. Personal loans are loans with fixed terms, that allows the borrower to take out large sums of money with fixed monthly payments. These larger sums can be challenging to qualify for quickly and with guaranteed approval through various lenders.
Comparison Between Same Day Loan and Personal Loan
1. Application Process
A same-day loan takes a shorter time to be approved and can have funds deposited in as little as a few hours. Personal loans, on the other hand, take much longer to receive approval. Also, it may require more paperwork and documentation than what is needed for a same-day loan application.
2. Flexibility
On the same day, loan borrowers cannot choose their interest rates or repayment terms. However, borrowers can alter their monthly payments and interest rate depending on their individual needs for personal loans.
3. Interest Rates
Personal loans have fixed interest rates, while same-day loans can vary from lender to lender. When applying for either type of loan, it is something to consider because it will determine how much they owe in total by the end of the loan term.
4. Fees
Both same-day loans and personal loans charge fees upon application and withdrawal, respectively. Same-day loans usually charge origination fees upon approval. Personal loans tend to have lower fees than same-day loans, which can save the borrower money over the life of the loan.
5. Eligibility
With same-day loans, borrowers need to be 18 years old and have a checking account to link directly to the lender. With personal loans, eligibility requirements vary between lenders
Pros Of Same Day Loan
1. Less Paperwork and Easier to Qualify For
Applying for a same-day loan is more accessible and takes less paperwork to be eligible for compared to personal loans.
2. Fast Access to Funds
If you need to get the loan on the same day, this type of loan is the best option. Borrowers can have the money deposited within a few hours of approval or up until midnight on the next business day if they apply on a weekend or holiday.
3. Emergencies
In an emergency where money is needed right away, applying for a same-day loan is one of the quickest solutions available as long as lenders accept such loans in this type of situation.
4. No Credit Checks
When applying for a same-day loan, borrowers are not required to submit their credit scores.
5. Tax Return Deposits
If you receive an income tax refund at the end of the year, some lenders allow you to use this money as collateral on your next same-day loan, which means no more waiting weeks before receiving it in your bank account.
Cons Of Same Day Loan
1. Rolling Over Debt into New Loans
Because same-day loans are often short-term and require quick repayment on or before the due date, some lenders charge fees or extra interest if you don’t pay the loan on time. It means that borrowers could easily find themselves in a cycle of paying interest on previous loans.
2. High-Interest Rates
Lenders only approve same-day loans to borrowers with good credit status, so these loans usually have higher than average interest rates, which can add up quickly.
3. Limited Borrower’s Rights
With many same-day lenders, there are limited rights and no protection should something go wrong during the loan term.
4. High Fees for Late-Payments
Expect to pay heightened late payment fees if you attempt to repay your total balance after your due date has passed. It can be true for those who cannot pay off the entire balance of their loan by their next paycheck.
Pros Of Personal Loan
1. More Time to Pay Off the Loan
Personal loans are longer-term loans that allow borrowers more time to repay them compared to same-day loans. It means you will have an easier time paying off your debt because of a lower monthly payment and less interest over a longer timeframe.
2. Less Fees and Costs Overall
When applying for a personal loan, the lender has no origination fee required from the borrower, so they save money on this upfront payment. With a personal loan, borrowers will pay less in fees and interest throughout the loan’s life.
3. Access Your Funds
With a personal loan, borrowers receive their money directly into their checking account and can use these funds without setting up bank transfers.
4. More Borrower’s Rights
When applying for a personal loan, borrowers have more protection under federal law, so they are guaranteed the right to complain or file a dispute if something goes wrong with their lender.
5. Lower Interest Rates
Interest rates for personal loans are lower than same-day loans because they are designed to be paid off over more extended periods. You will pay less in interest overall, which can make a big difference when it comes to the amount you ultimately pay back at the end of your loan term.
Cons Of Personal Loan
1. Longer Repayment Terms
Personal loans are longer-term loans that require borrowers to repay their debt over a fixed time, so it is easier for them to become overwhelmed and forget about their monthly payments, leading to defaulting on the loan.
2. Difficult for Emergencies
If a borrower needs money fast, a personal loan may not be convenient because these loans have much longer repayment terms than same-day loans.
3. Riskier for Those with Bad Credit
Personal loans from banks or private lenders require good credit ratings for approval. Those with bad or poor credit ratings are unlikely to be approved for such loans.
4. Less Borrower Flexibility
Personal loans require borrowers to repay their debt according to a set schedule and repayment plan that cannot be changed unless the borrower applies for another loan from the lender.
5. Longer Application Processes
Individuals who apply for personal loans must go through a lengthy application process. They often need several pieces of supporting documentation such as proof of income, identity, and bank account information before their loan is approved.
Bottom Line
Both same-day and personal loans have advantages and disadvantages, but if you need quick cash right away, a same-day loan is probably your best option. However, if you are looking for the lowest overall costs on your loan or require more time to repay your debt, then a personal loan would likely be better suited for what you need.
