Guaranteed Loan

Is a Payday Loan a Guaranteed Loan?

Guaranteed loan shops often give payday loans, too

Some pawnshops offer payday loans as well.

Many people who haven’t used short-term credit before might not know what the term “guaranteed loan” means or how it is different from a payday loan.

I have found that people often have misconceptions about these terms because payday lenders and other forms of short-term credit have been targeted by media and political lobbyists. So allow me to clear a few things up.

What is a guaranteed loan?

The term “guaranteed loan” is most often used to refer to things like car title loans or loans you get from a pawn shop in exchange for some sort of collateral. It means that your loan is “guaranteed,” as far as the lender is concerned, because if you don’t pay it back the lender gets to take or keep the collateral.

So if you take out a car title loan and don’t pay it back, the lender can take your car. If you pawn a $300 instrument for $40 and don’t pay back the $40, the pawnshop gets to keep the instrument. Just like other forms of short-term credit, if you are irresponsible and don’t follow through on your end of the agreement, you can end up losing money.

What is a payday loan

Payday loans are a lot more like regular, traditional loans in that you borrow money and pay back money. They are also called short-term loans because usually the loan is due to be repaid in two to four weeks.

Usually the borrower and lender set up a method of payment that doesn’t require any more action on the part of the borrower. The lender has a check to cash or a bank account number that allows the loan to be repaid quickly and conveniently on an agreed upon date.

Analyzing terminology

Some people might look at a payday loan as a guaranteed loan because at the brick-and-mortar stores you leave a check for them to cash on the loan’s due date. With online payday loans, you usually grant the lender permission to withdraw funds from your bank account for the sake of convenience.

However, the biggest difference I see is that often with guaranteed loans you stand to lose something very valuable in exchange for a small amount of money. For instance, most car title loans are only for a few hundred dollars, while most cars are worth thousands. So, if you don’t pay back your car title loan, you could lose your $5,000 car even though you only got a $300 loan.

Pay back your payday loans

With payday loans, it is true that when you pay back your loan you will pay more than what you borrowed. However, the fees are only a tiny fraction of what you could potentially lose in the case of a guaranteed loan.

Payday loan service fees are what keep payday lenders in business. Just like a car wash or a salon, it’s a service that costs money to perform. Also, like those other services, you don’t have to pay for it until you’ve already used it. Just as their would be consequences (like jail) if you walked out of a salon without paying, there are consequences if you don’t pay for your payday loan service.

Use payday loans responsibly, keep track of your loan’s due date, and I think you’ll agree with me that they can provide much-needed relief in a pinch and be a huge help when there’s nowhere else to turn. If you’re a responsible borrower who needs some emergency funds, you can APPLY ONLINE for a payday loan right here and have access to your money in just a couple of hours.