Payday loans are short termed, are available as online loans, and cater to your immediate, urgent cash needs. Any secured loan will never be able to deliver to an emergency cash crunch. Online loans are designed in such a way that they meet your requirements in the easiest way possible, at the earliest. There should be no confusion in choosing the type of loan you need, based on your requirement. But, secured loans are very difficult to obtain and the application, verification, notification and processing takes a very long time. To compare payday loans and secured loans, you should look at the following criteria:
Comparison of the eligibility criteria - The background verification process that banks typically employ is complicated and requires a lot of personal information to be submitted as part of the application. A single dent in your financial history can prove to be a hindrance in availing of a secured loan, and your application is rejected. If you are still hung up on the idea that secured loans are better than payday loans then consider this, online loans fulfill your immediate short term needs, and can be repaid on your next payday. You are not pressurized to set aside or lose out a certain amount of your income every month for a year or more, which would be the case of a secured loan. The eligibility criteria for a payday loan is very simple, you have to be 18 years of age or above and have a valid citizenship, and all you need to have is a regular job, a bank account and a valid debit card.
The notification period - Applying for a secured loan to a bank gets you all worked up, while applying for online loans is much simpler and you don't have to hold your breath or cross your fingers and wait in anticipation of the loan to come through for days together. You will be notified of the loan approval or rejection in a matter of hours and if approved the money is credited to your account fast. While waiting for notification of approval or rejection for a secured loan can be a nail biting task.
Interest Rates - Secured loans offer low interest rates because they are long-term loans, and they are given against a collateral. Payday loans have high interest rates, due to their short-term nature, and due to the high risk factor. Interest rates are usually calculated on a yearly basis, and thus, this calculation does not do justice to online loans.
Improving your financial record - Once you have repaid a payday loan you build up a reliable credit score, which over a certain period of time, will help you, avail secured loans too. Credit scores and credit ratings are now being used in various ways to determine credibility of an individual. Credit scores have been used to efficiently calibrate insurance premiums and to determine the amount of leasing deposits. Credit ratings are also sometimes used to determine eligibility for employment. The biggest convenience of online loans is the swift process.