The Difference Between Collateral Loans and Payday Loans.
Windy City Jewelry & Loan offers collateral loans in Elgin and Evanston to customers who need cash quickly. We get a lot of questions about the difference between collateral loans and payday loans. While both collateral and payday give people cash, the loans vary with the amount of risk and extra fees.
A collateral loan, also known as a secure loan, is a cash loan that is given against an asset that the customer owns. If the loan goes unpaid, lender can sell your asset as payment for the loan. In most cases, it is easier to get funding for your assets at a lower interest rate when using a collateral loan than with loans typically offered through banks. The lending party will often offer 50% - 80% of the items value as a loan to the borrower, depending on the condition of the item and the item itself. Once the loan is repaid, the asset is simply returned to the borrower.
Payday loans are short term loans for a small amount of money that have very high interest rates. These loans are also known as cash advance loans. The borrower writes a personal check to the lender for the amount of the loan plus the interest, and they agree on a date for the lender to cash the check, typically on the day of the borrowers next payday. The interest rates for payday loans are extremely high. They typically come out to have an APR around 750%! Although these loans are usually for 30 days or less, the extremely high interest rate can lead to more financial problems for the borrower.
When choosing between payday and collateral loans there are several points to consider. Borrowers need to consider the interest rates associated with payday and collateral loans. Payday loans interest rates range from an APR of 300% to 750%. Collateral loans are offered with interest rates that mirror bank interest rates, typically not exceeding an APR of 25%. Not only do collateral loans have lower interest rates, but they also offer more cash than payday loans.
Collateral loans offer lower interest rates, longer loaning periods, and more money. Borrowers should be very cautious of the terms of a payday loan, because many come with additional clauses and some have changing interest rates during the time of the loan. Collateral loans provide you with a secure option for accessing additional funds at a low interest rate and low risk.
At Windy City Jewelry & Loan, we offer our customers low risk cash loans. Whether you need a collateral loan for $10 or $1000 we offer free evaluations and premium prices. We are dedicated to providing financing through collateral loans Evanston and Elgin residents can get when they need them. Our loans won’t hurt your credit, and we do not conduct credit checks. Call or come in to Windy City Jewelry & Loan today for more information on getting your collateral loan!