Payday & Personal Loan Options: Online Direct Lenders vs. Loan Matching Services

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So, you need quick cash.

What option will you take?

You can either seek a loan matching service or direct lenders online. The online direct lenders or loan matching services will offer you either a personal loan or payday loan.

But, before you take the leap…

You need to know the pros and cons of these four options.

Let’s start with the difference between payday and installment loans.

Payday Loans vs. Installment Loans (Personal Loans)

Payday loans are characterized by a short duration, high interest rates, and payment in a single lump sum on the borrower’s next payday. Hence, the name payday loan.

Personal loans, a form of installment loans, have contrasting features.

Personal loans typically last for long periods, with spread-out payments, and lower interest rates. Personal loans are installment loans because the payments are made in small installments.

Let’s analyze these two loan types more closely.

Payday Loans

Payday loans are also called salary loans or cash advance loans.

The loan is typically unsecured. Hence, the loan amount is limited, and the loan duration is short. What makes it attractive is the fact that borrowers with bad credit can more easily qualify for such a loan compared to personal loans.

If you’re looking for bad credit loans guaranteed approval direct lenders or loan matching services, payday loans would be your best bet. But it does have some serious disadvantages.

Pros of payday loans:

  • You’ll likely qualify for such loans even if you have less-than-stellar credit.
  • Payday loans would likely be your ideal choice when seeking emergency loans bad credit direct lenders.
  • This is the one option that would give you guaranteed signature loans for bad credit, since lenders likely won’t check your credit score.
  • A payday $1,000 loan bad credit direct lender may not even require income verification.

Cons of payday loans:

  • Unsecured loans, such as payday loans, are expensive and should only be used for short-term emergencies.
  • It’s not a long-term solution to financial issues.
  • Lenders may require post-dated checks, so they can deduct money owed directly from your account.
  • You can’t get amounts higher than $1,000.
  • You have to pay the loan in one lump sum, and any postponement will mean higher fees.

Personal Loans/ Installment Loans

Personal loans are a type of consumer loan.

A personal loan offers the privilege of repaying in small monthly installments. Besides, you can do this conveniently over a long period of 2 to 5 years.

Although most such loans are unsecured, you do have to meet stringent requirements, including specific credit scores and income levels.

Ultimately, the greatest advantage is the low APR (annual percentage rate), between 7% and 36%.

Pros of personal loans:

  • Personal online loans direct lendersand loan matching services offer better interest rates than payday loans.
  • You get longer loan terms, making repayment convenient.
  • If you have an excellent credit score, you’ll easily get signature loans, which don’t require collateral.
  • You can get even cheaper secured loans backed by assets like cars or houses.

Cons of personal loans:

  • Requires borrowers with a fair credit at least.
  • Lenders have multiple requirements, including where you work and the period you’ve worked there.
  • With a secured loan, you risk losing you asset if you default on loan payment.

Now that you understand the issues regarding payday loans vs. installment loans, your next concern is which type of lender to approach.

You can get your loan either from online direct lenders or loan matching services.

Here are the differences you can expect.

Online Direct Lenders vs. Loan Matching Services

As you peruse websites of online loan services, one of the first things you should check is if they are online direct lenders or loan matching platforms.

Pros and cons

Loan Matching Service

What is a loan matching service?

A loan matching service (loan connecting service) doesn’t lend money nor broker any loans. Instead, they match or connect you with one or more lenders who will likely purchase your loan application.

The owners of loan matching sites sell your application to the highest bidder for your lead.

How do you tell if the site is a loan matching service site?

The easiest way to find out if the site is a loan matching service site is by scrolling down to the bottom of the web page to read the disclosure.  They should indicate they are not a lender or broker of any loan.

Loan matching services help you connect with many online lenders at once.

Examples of loan matching services are cashadvance.com or personalloans.com.

From these sites, you fill out a complete application online. If your application is eligible, you will then be notified by a few lenders who would like to offer you a loan. If, for any reason, you don’t like the agreement terms, you can always turn down the loan without any obligation.

This saves time for borrowers who don’t like to fill out multiple online applications from various lenders.

Pros of a loan matching service:

  • One application for multiple lenders: This can tremendously save you a lot of time looking for a lender.  The application will ask all the necessary questions, and it will be forwarded to multiple lenders. It does all the loan shopping for you at once.
  • Bad credit doesn’t matter: Your credit score is only a small part of the loan approval process. Decisions are based on various criteria, and each lender is always different from the other. They can focus on such other things as: your income, debt-to-income ratio, how long you have been employed, marital status, education level, etc. If you have a good and steady income source, you stand a greater chance of being approved.
  • More lender choices: Since multiple lenders all get your application, they will often compete and offer a better rate than other competitors.  This could help you get the lowest interest rate offer.

Cons of a loan matching service:

  • You’re not really sure who will offer you a loan in the end, until you see the agreement: Unlike applying for online direct lender loans, you can’t research the company or find out the rates beforehand.
  • You may receive unwanted emails and calls from other companies.

You can compare loan matching services and online direct lenders right here:

Fastest Way to Get Online Installment Loan Offers In Minutes

Compare rates from multiple lenders. Discover your lowest eligible rate.

It's free, quick and won’t hurt your credit score

Online Direct Lenders

What is a direct lender?

Unlike a loan matching service, online direct lenders are online companies that loan the money directly to you. A few examples of this type of company are Upgrade and Avant.

Some lender may not serve loans in your state, so be sure to check the lender’s site for your qualification. You can also use our lender search tool to find our recommended online direct lenders for your State.

When you complete their secured online application, the company will assess your creditworthiness and other criteria to evaluate their lending risk. If they think you have a higher risk rating from their quick online evaluation, based on your profile, they will give you a higher interest rate loan.

They can also reject your application.

On the other hand, if you have a lower risk rating, you can be approved with a lower-interest rate loan.

Whether you go for personal or payday direct lender loans will depend on your specific situation. For instance, if you’re looking for a $1,000 loan bad credit direct lender, a payday loan may be an easier option, due to the less stringent credit requirements.

Pros of a direct lender:

  • You know the company making the offer: You get to research the company, read what others say about it, and find out about the approximate loan terms and rates before you even apply.
  • Bad credit doesn’t matter: Loans are typically based on your income and other criteria, and not solely on your credit report. Take note, when seeking online loans from direct lenders like SoFi, they’ll look at your education level as part of their loan evaluation criteria.
  • Better customer support: You can often get customer support directly from the lender’s site.

Cons of a direct lender:

  • Loan comparison shopping can be time-consuming.
  • The lender you like may not be available in your State.

Here are the top online direct lenders:

LendersLoan Amount Loan TermsFeesCheck Rate

Avant Review
$2,000 - $35,000 24 to 60 mo Up to 4.75% of the loan

APR: 9.95% - 35.99%

Upstart Review
$1,000 - $50,000 36 to 60 mo 1% - 6% of the loan

APR: 8.92% - 29.99%

Compare rates from multiple lenders. Discover your lowest eligible rate.

It's free, quick and won’t hurt your credit score
NetCredit Review
$1,000 - $10,000 6 to 48 mo Not disclosed

APR: 34% - 155%

SoFi Review
$5,000 - $100,000 36 to 84 mo No fees

APR: 5.49% - 14.49%

Payoff Review
$5,000 - $35,000 24 to 60 mo 2% - 5% of the loan

APR: 8% - 25%

Best Egg Review
$2,000 - $35,000 36 to 60 mo 0.99% - 5.99% of the loan

APR: 5.99% - 29.99%

Freedomplus Review
$10,000 - $35,000 24 to 60 mo Up to 5.99% of the loan

APR: 4.99% - 29.99%

Lendingpoint Review
$3,500 - $20,000 24 to 36 mo Varies by state

APR: 15.49% - 34.99%

Prosper Review
$2,000 - $40,000 36 to 60 mo 1% - 5% of the loan

APR: 6.73% - 135.36%

 
Here’s a summary of the differences between direct lenders and loan matching services.
 
Online Direct LenderLoan Matching Service
(Loan Connecting Service)
Application Time Saving
Better Customer Service
More Lender Choices
Receive Multiple Offers
May Receive Multiple Calls
Know Your Estimated Rate Before You Apply
Reputable Sites Avant,
Best Egg,
Upgrade
BadCreditLoans,
CashAdvance,
PersonalLoans

Bonus Option: P2P Lenders

Who are P2P lenders?

And, what is a P2P loan?

This is one other option to consider: a P2P loan. P2P means person to person or peer to peer. An example of peer to peer lending websites is Prosper.

These sites are made up of two types of people: investors and borrowers.

Investors put up their money. Borrowers fill out loan applications and get loans at fairly decent rates. Investors then make a little money through borrowers’ interest payments. To learn more about P2P loans, you can visit here.

 

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