Personal loans and quick loans are both unsecured loans. The former is intended to help people meet planned large expenses such as buying gadgets, home improvements, and weddings, whereas the latter has been designed to fund urgent cash gaps such as unexpected medical bills.
When it comes to borrowing money, it becomes hard to decide which loan option is actually suitable for you. Choosing the wrong financial product costs, a lot of money. Experts suggest understanding the fundamentals of each loan product before deciding between them.
The basic difference between a quick loan and a personal loan in Ireland is that the former is ideal for meeting small emergency expenses. At the same time, the latter is suitable for planned expenses.
What are quick loans?
Quick loans are also called small emergency loans, as they help borrowers fund the gap in savings when an emergency expense crops up. These loans are quickly disbursed, almost the same day you submit the loan application. You can qualify for these loans despite a compromised credit history.
The loan amount ranges between £100 and £1,000. If the borrowing sum is up to €500, no credit inquiries will be made, because loans of €500 size are not reported to the Central Credit Register (CCR). The lending decision will be based on your income. It is vital to prove your repayment capacity while applying for quick loans.
Since the loan amount is exiguous, you will be required to discharge the whole debt within a short period of time. Few lenders allow for weekly or bi-weekly repayments, depending on the loan amount.
Interest rates for quick loans are normally high. Since the default risk is too high and they are aimed at subprime borrowers, lenders charge high interest rates. The APR for quick loans starts at 49%.
Bear in mind that interest rates and APRs are not the same. An APR is an annual percentage rate that includes both interest rates and fees. Rates that you see on lenders’ websites or comparison websites are not APRs. Further, those are the lowest possible interest rates, which you might not qualify for because of a poor credit history.
If you are looking to apply for quick loans with fast decisions in Ireland, you should apply with a broker. They can connect you with lenders whose criteria you easily meet. They also maintain transparency and help you qualify for better deals, which are exclusively offered to borrowers who apply through the agency of a broker.
The following are the types of expenses that quick loans can meet:
• Car repairs
• Medical bills
• Home repairs
• Unexpected utility bills
• Travel costs
• Rent
• Repairing and replacing appliances
What are personal loans?
Personal loans refer to a sum of money that you borrow from a lender to meet large expenses, which could be unexpected as well as planned. These loans are paid down over a period of months. Unlike quick loans, personal loans are more affordable as they spread the cost of the loan. The loan amount of personal loans ranges between €1,000 and €25,000, and the repayment term ranges between 6 months and five years.
Except for being unsecured, personal loans and quick loans are quite different in their features. Unlike quick loans, personal loans can help improve your credit score. They spread the cost, so they are more manageable than quick loans. You can easily budget around payments.
Personal loans are available from banks, credit unions and direct lenders. While you can directly apply to lenders, it is advisable that you consult a broker.
Personal loans come with a large amount of money, and they are not as easily approved as quick loans. Lenders will go through your credit history and overall financial condition. It is essential that your overall financial condition is good to be eligible for lower interest rates.
Choosing a broker is beneficial because you do not have to apply to multiple lenders within a short space of time. This will protect your credit history. A broker will submit your application to their partner lenders whose criteria you meet. They will let you know about interest rates, APRs and repayment terms so that you can choose the most suitable lender.
The APR for personal loans is lower than that of quick loans. The following are the expenses for which you can use personal loans:
• Wedding
• Home renovation
• Debt consolidation
• A gadget purchase
Difference between quick loans and personal loans in Ireland
The following table demonstrates the difference between a personal loan and a quick loan in Ireland:
Features | Personal loans | Quick loans |
| Speed | It takes a couple of days to get approval | Approval is made the same day you apply for it |
| Loan size | Between €1,000 and €25,000 | Between €100 and €1,000 |
| Interest rates | Lower | Higher |
| Repayment terms | Up to five years | A lump sum payment |
| Risk of falling into debt | Moderate | High |
| Suitability | For planned large expenses | For small emergencies |
Which one should you use and when?
You should use a quick loan when:
• You come across unexpected expenses such as medical bills and a car breakdown.
• You only need a paltry sum of money.
• You are completely confident about your repayment capacity.
You should use a personal loan if:
• You need money to pay for a planned expense such as home renovations because your budget is short of cash.
• You want lower interest rates and to spread the cost of the debt.
• You have stable income and good credit history.
The bottom line
Quick loans are meant to fund small emergency expenses, and personal loans are meant to fund planned larger expenses. Both types of loans are unsecured, but quick loans come with a very short repayment period and high interest rates, while personal loans spread the cost over an extended period.
Quick loans should be chosen when you need a paltry sum and you are certain about your repayment capacity. Personal loans should be chosen when you want to save money on interest and spread the cost.
