Why payday loans and not bank loans?

Posted by adairsawyer on October 22nd, 2011

Whenever you need a loan you invariably tend to think of banks. It is true that a bank loan gives you the best rate of interest. However, there are many people that are now moving toward payday loans instead of opting for bank loans. And there is good reason why they are doing so.

People that have a bad credit rating or have declared bankruptcy invariably opt for payday loans. If someone has a negative credit rating or has declared bankruptcy, they can forget about getting bank loans. Banks today have really tightened their credit policies. They sit with a trigger in their hand and the moment they find that something is amiss they are more than happy to reject someone’s loan application. On the other hand, providers of payday loans don’t bother about these things. If an 18 year or older Canadian citizen with a regular job applies for a loan they are more than happy to provide the loan.

Earning plays a big role in getting a bank loan approved. Banks have a minimum earning criterion below which they don’t consider loan applications. There is also a minimum amount that banks sanction as loans. Hence, if you are just about getting by with your monthly pay, you will, in all probability, not be able to get any of the bank loans. Payday loans, on the other hand, don’t have a minimum income criterion. They can offer loans from $50 to $1,500 depending on the income of the applicant. So, almost anyone with a regular job can apply for an get a payday loan.

The time taken for getting bank loans approved is another reason why people opt for payday loans. A bank typically takes a week or more to approve a loan. They ask for various documents and they spend time doing their verification. Providers of payday loans, on the other hand, approve loans almost immediately after someone has applied. They also ensure that the loan amount is credited to the applicant’s amount on the same day or within 2 working days of the loan being approved.

Bank loans are long term in nature. When you take a bank loan you need to pay at least 24 to 36 monthly installments. So, every month you need to keep a tab on your financial situation and ensure that there is enough money in your account to pay the installment. In the case of payday loans there is only one payment and the loan is paid off. There is no need to bother about monthly installments.

If you have a sudden financial crisis, your bank will not be able to help you. Bank loans have too many conditions attached to them and they cannot help even when they want to. But you can always bank on providers of payday loans to bail you out from any financial crisis. If you have a crisis, apply for a payday loan today and tide over it. You will never need to depend on a bank loan.

There are many reasons why so many people are now turning away from conventional bank loans and instead opting for payday loans.