Who thinks of the loan type when you need one urgently? In some cases, quick loans and personal loans may seem similar. But they are not.

Well, it is important to choose the right loan type. Otherwise, you may end up getting the wrong one that does not cover your needs. The worst situation can be falling into a debt trap. Every loan has a specific purpose, and interest rates may vary.

For example, personal loans are cheaper than quick loans.  What if you end up paying more interest for a purpose that would have been covered affordably? If you are confused about the difference between personal and quick loans and which to choose for your needs, read on. The blog discusses the difference between the two in detail.

Quick loans Vs. Personal loans: definition

Quick loans are short-term financial facilities for emergency and critical purposes. One can tap it to cover urgent cash needs, such as buying medicines, paying for groceries, or bridging rent payments. It does not require or mandate a collateral or a guarantor.

If you can afford the loan payments within your current income and finances, you may qualify. No, you don’t need to enter a detailed documentation or credit assessment process. Instead, you may get the loan by just revealing your income proof.

It is the reason you may get quick loans on the same day in Ireland. Moreover, the credit assessments do not affect your credit score. You need to be consistent with repayments to maintain your credit score.

Personal loans, on the other hand, cover a vast purpose (short and long-term). You can tap it to cover urgent cash needs like refuelling the car, and also for undertaking a home renovation project. Precisely, the loan helps you split the cost of purchase into easy and fixed monthly instalments.

Quick loans are also personal loans used for individual needs. The interest rates on personal loans are competitive. However, it is still affordable than quick loans. You may be required to provide a guarantor if you want a high amount with a bad credit score.

It may help you qualify quickly and help you build a credit score. The documentation and loan process are lengthy due to the checks involved. The credit assessment may hurt your credit score slightly if seeking a higher amount for a long term.

Quick loans Vs. Personal loans: Borrowing limits

You may get up to 3000 Euros on quick loans for your needs. Thus, analyse the amount requirement and borrow it rightly. If you need to counter small emergencies, the loan would be apt. The fixed instalments help you budget and repay the dues on time.

On the other hand, personal loans cover a vast aspect and hence come with a higher payout. You may get up to 25000 Euros for your needs here. It is ideal if you want to purchase a new appliance, repair the bathroom, or decorate your home for Christmas. However, the amount you get depends on your needs and affordability.

Quick loans Vs. Personal loans: Repayment period

The best part about these quick loans is that they help you get debt-free quickly. It is especially when you earn consistently and can repay the dues without skipping any payment. You may generally repay the dues within 6-12 months of the repayment period.

You can choose one according to your monthly bills, monthly instalment amount, and savings. Yes, you may choose a 12-month loan, but it may mean paying more interest. Thus, use calculators and take the creditor’s help to calculate by when you can repay the dues comfortably. It prevents you from entering the debt-trap. Lastly, paying a fixed amount consistently helps your credit score.

Alternatively, personal loans, used for small and big life purposes, come with repayment terms of 1-7 years. It is an instalment loan which helps you spread payments over a long term and pay a fixed amount every month. It is an ideal structure for individuals with inconsistent income or seasonal pay. They can repay the dues comfortably in 7 years by rationalising the choice of the right term.

However, the impact of defaulting on the loan is less severe than that of a quick loan. It is due to the fact that interest is higher on quick loans than on personal loans. Still, you must compare and get the cheapest personal loan in Ireland. It eliminates the chances of paying extra interest. Moreover, watch out for additional or hidden costs that increase the cost of the loan.

Always focus on the total amount to pay rather than APR while getting a personal or a quick loan. Paying off a long loan helps repair your credit history. A personal loan is the best and healthiest way to meet needs and improve credit reputation.

Quick loans Vs. Personal loans: Credit score

You may get these fast loans without any credit score barriers. It is because creditors here prioritise an individual’s ability to repay the dues instead of their credit score. So, whether you have a bad credit score or no credit, you may still qualify.

However, you must have a decent income that matches the eligibility criteria to support the loan repayments. It thus gives more flexibility to even the unemployed to get a small loan to meet their essential needs. In this, one should at least have a part-time income apart from benefits to qualify.

On the other hand, you must have a good credit score to get a personal loan. Otherwise, you may fetch high interest and strict repayment terms. The higher the credit score, the larger the amount you may qualify for.

Otherwise, you may need to provide a third-party guarantee or a guarantor if you don’t meet the affordability criteria. It is because here the creditors consider both credit score and income to analyse the affordability. Moreover, a personal loan is a long-term loan requiring serious and consistent commitment to repayments. A mere doubt in that leads to loan rejection.

Bottom line

Quick loans and personal loans differ in their approach, interest, purposes, and repayment timelines. You may consider a quick loan if you want cash the same day or to meet emergency expenses.

Similarly, a personal loan is ideal for both short and long-term requirements that require a heavy lump sum. Compare the two loans and put them against your cash requirements and purpose. It will help you choose the right loan.