Loan and payday loan: the most important differences

Written By : on November 18, 2019

The non-bank loans sector in Poland is growing more and more with each subsequent year. Not only indicators showing profits and turnover of loan companies are growing, but also the number of customers using non-bank loan products. Unfortunately, the growing popularity of non-bank loans is not always accompanied by an increase in knowledge about the specifics of this type of solution. One of the more common mistakes made by loan institution customers is to denominate all non-bank loan products as payday loans. Meanwhile, a loan and payday loan are two terms with a slightly different semantic range. For obvious reasons, every payday loan is a loan, but the rule no longer works the other way around. A summary is on http://crawfordhk.com

So let’s look at this issue a little more closely and try to bring the differences between the concept of loans and payday loans.

 

Loan and payday loan: the most important differences

Loan and payday loan: the most important differences

As already mentioned, by definition, every payday loan is a loan product, in other words simply a loan. It should be noted, however, that the term payday refers specifically to a particular type of loan that meets the given criteria. So how do you define payday payday? The most important features of this type of loan are:

  • Relatively short repayment period (up to 30 or possibly up to 60 days)
  • Easy and quick loan application procedure

 

Relatively small loan amount

Relatively small loan amount

So, as you can see, a loan and payday loan is by no means the same. In relation to the non-bank loans themselves, we will also find offers containing solutions such as long-term installment loans or other products with a more complex structure.

It is also worth noting the very clear difference between payday loan and bank loan. As is well known, in the case of the latter, the application process can hardly be described as easy and quick, even with regard to ordinary consumer loans. Also, the duration of a bank loan is almost always much longer than 1 or 2 months.

 

What else is worth knowing about payday loans?

What else is worth knowing about payday loans?

Another important issue is the formal difference between specific entities that provide payday loans in the realities of the Polish market. Often, customers are aware, for example, that a loan and payday loan are two different terms, but at the same time they see all non-bank entities as “loan companies”. This is obviously incorrect from a formal point of view and, moreover, can lead to unpleasant consequences.

Therefore, it is worth knowing that, as a rule, entities providing payday loans are divided into two categories: they are loan institutions or so-called parabanki. In the case of the former, we are dealing with reliable companies that appear in the Register of Loan Institutions and are subject to control by the Polish Financial Supervision Authority. In turn, the so-called parabanks are the proverbial gray area. These entities provide loan services by skilfully circumventing the law. So you don’t have to explain why using parabanks can be a high risk.

 

 

Michael O'hare

Author: Michael O'hare

Michael is a Experience Auto Financing Specialist that Prides himself on Providing a Full Scope of Options for all His Clients and Customers. Not only does he provide guidance and assistance for those looking into getting a Car Loan, but helps those who have challenging credit scores to get approved for the lowest rates possible!