Stressed and just mentally exhausted, you find yourself pining for some social outlet that will take your mind off work. Then, one day while flipping through the channels an advertisement for a discounted cruise to the place of your dreams appears. Excited, you consider all the pros and cons of taking a cruise and the pros almost outweigh the cons until you realize that the discounted cruise is still a little more money than you will make before the cruise's deadline. Thoughts of a payday loan flood your mind because it is quickly obtained, however, an unsecured loan may be in your best interest.
Payday loans are loans that are geared toward meeting an immediate and temporary financial need or aid in making a monetary desire quickly attainable. These loans, like unsecured loans (which require no collateral) can be processed quickly because there is no assessment of valuable assets for exchange. However, choosing a payday loan means giving the bank permission to withdraw the funds borrowed directly from your checking account on the date that you are paid in addition to taking at least 10% of your pay as a fee for using their service.
The fee increases should there arise a reason that causes you to postpone or extend payment on that loan. The more you borrow, the higher the fee with these loans. In addition, the longer you take to pay off these loans, the more indebted you will be. Typically, a borrower of this type of loan should not take more than the next pay period to pay the loan entirely. If there is even the slightest possibility that on-time payment will be an issue, this loan should be avoided altogether. Unsecured loans are a better alternative.
Unsecured loans are perfect for individuals who are working, do not own property, and can use the extra cash. These loans like payday loans can be obtained very quickly. The major differences between the two are that unsecured loans do not have to be paid the following pay period nor do fees compound at the alarming rate of payday loans. Unsecured loans are intended for a lengthier use of time thereby giving the borrower an opportunity to pay monthly under less pressure than a payday loan.
With an unsecured loan, you can consolidate your debt and work on reasonable payment plans with the lender. It would be unwise to even consider a payday loan for this purpose, as there is little time to pay off this type of loan and additional fees included. An unsecured loan gives the borrower somewhat of an extended grace period with more opportunities to borrow more money with minimal anxiety when compared to a payday loan.