The basic differences between cash loan and bank credit
Bank credit can be repaid over a longer term. These typically can be repaid over a period of months or years depending on how much you borrow and the lending organizations policies.
A cash loan is a short-term loan with a shorter repayment period of one, two or more months. With a cash loan, you don’t usually need to get a thorough credit check or provide any other financial documents.
A cash loan is also known as a payday loan. This type of loan relies on the consumer having previous payroll and employment history but not necessarily need to prove it with documents.
Bank credit is an agreement between banks and borrowers where banks trust a borrower to repay funds plus interest for either a loan, credit card or line of credit at a later date. It is money banks lend or have already lent to customers. Bank credit is the total borrowing capacity banks provide to borrowers.
Regardless if repayment of the pay day loan is linked to a borrower's payday, the loan is referred to as cash loan. Though that term can also refer to cash provided against a prearranged line of credit such as a credit card. Payday loans rely on the consumer having previous payroll and employment records.
Bank loan Drawbacks
Rigid requirements: usually bank loans require some form of collateral, startups and existing businesses without any assets may find it difficult to get their loan applications approved. It does not make sense to go for large bank loans for small expenditure purposes.
Repayment Burden: Loan borrowers must make periodic payments to their banks. Those who fall behind on payments face the prospect of having their credit image diminished. Even if you manage to make late payments, your bank could still report you to CRIB, a move that can negatively affect your credit score. With a lower score, obtaining loans in the future becomes harder.
Irregular Payment Amounts: If you get a bank loan with a variable interest rate, the rate changes with market conditions. This makes it difficult to determine the exact amount of future payments. This affects the ability to plan.
Cash loans Benefits
- People with poor credit abilities can to apply. A soft credit check will be performed.
- Instant decision, so no need to keep waiting.
- If approved, the money is sent to your account instantly. Simply visit an ATM to withdraw!
- Repayment amounts is calculated according to the repayment period.
- No Interest, only service charges and convenience fees.