There are situations when you really need money, and the sooner the better. Luckily, the Internet has gone so far in our lives that it is now possible to borrow money online. However, you should be careful and understand all the subtleties to get advantage of a variety of online ticks banks and services are willing to offer.
There are few types of online ticks to choose from depending on a person’s needs and circumstances:
- payday loan,
- installment loan,
- peer-to-peer loan.
What is a payday loan?
A payday loan might save you when you have short-term money problems. The sum of money given to you is not high and it is expected that you can repay it within short period of time, a month usually. The advantages of such services include fast approval, the possibility of rejection is low, even when all other services turned you down.
As for cons, the rate of this type of loan is also considered to be quite high, although it depends on the particular service as they set an interest rate by themselves. Therefore, before you take out a payday loan, make sure you’ve thoroughly checked all the information and terms of the service you borrow from.
What is an installment loan?
Installments ticks are also considered to be short-term. This type of loan implies you will have to repay in installments, a fixed amount each month. The duration is longer than for payday loans. The interest rate on this ticks is still high, although it is forbidden to set it tremendously unreasonable, according to APR (annual percentage rate) established by the state.
As for disadvantages, online banks usually require to provide security in the form of personal property, in case you fail to pay off the debt.
How do peer-to-peer loans work?
Unlike previous two types, peer-to-peer ticks, usually referred to as P2P, can be provided by people, not by financial institutes such as banks and other organisations. All you need is to go on a website that enables lenders and borrowers meet and find the best option for yourself. The rates are quite competitive, the process of application and approval is also quick. Another advantage is that you prepay the money taken without any penalties, unlike with payday and installment ticks, which will save you some money on interest rates. The main disadvantage is problems with safety and storage of information since such services are decentralised.