Difference between Personal Loans and Payday Loans

In the earlier years people used to hesitate from taking personal loan, because of the high rate of interest and inability to pay on time, but the system is changing rapidly and people take personal loans pretty casually. To avail a personal loan is also pretty easy and there is a wide range of banks and lenders from which you can chose. Payday loans are also similar to a personal loan but for a much-much shorter time. The principal of personal loan and Payday loan is to pay for things which you might not be able to purchase at once. Let’s compare the both and look at their some of the pros and the cons.

Personal Loan

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A personal loan is not like a home loan or a car loan, as in the bank cannot confiscate something from you. In case of Home loan, if you do not pay, the banks takes your house and if you do not pay for your car loan, the bank can confiscate your car, but that is not the case of personal loan and bank cannot directly seize your assets. That is why personal loan takes weeks to process and approve. For your personal to be approved you need a good enough credit score too. Usually banks charge high rate of interest like 12% to 15% but apply for HDFC personal loan, you can get rate of interest down to just 10%.

Pros-

  • Lower Interest Rates- Although personal rates are high but when compared to a payday loan, it is significantly low.
  • Avoid credit card debt- A personal loan has much lower rate of interest as compared to credit card processing fees and even the rate of interest charged at the time of repayment is much higher combined.

Cons-

  • The rate of interest on personal loan depends on credit score, so if your credit score is low than chances are your rate of interest charged on the personal is high. In case of a big purchase, get a new credit and enjoy 0% rate of interest in the beginning.
  • As I mentioned above, personal loan takes time to process and it is not very easy to get a personal loan approved. Especially if you have a low credit score.

Payday Loan

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A payday loan can be defined as a short term loan with high rate of interest. As the name suggests the loan must be paid by the time you receive your next salary. So the duration of the payday loan is only 1 months. In some cases, the income or salary is not credited every month, in that case the loan must be paid in whatever time is mentioned by the loanee, like 2 months, 3 months or 6 months.

Pros-

Credit score is not important- You can get your payday loan approved even if you have a poor credit score and even if you have no credit history.

Loan Amount can be small- As the loan duration is very short, the loan amount can also be short and the limitation on how small the loan amount can be is pretty low.

Cons-

Higher rate of interest- As mentioned above payday loan have very rate of interest that is why it is usually not suggested. The average rate of interest starts from 15%.

Payday loan can become a Debt Trap- The banks are very smart and most of the time they know the lonee would not be able to pay on time, going by their credit history, so they offer other loans to the loanee as well, which can become a vicious cycle of never ending loans and debts.

Conclusion- The payday loan should be avoided in most of the scenarios, but in case you have some kind of emergency and you need the cash quick and you can pay it by the next payday too then it would be the best choice, otherwise go for a personal loan.

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CSR – Scope and Options

CSR initiatives don’t stop with donations to charity or funding working out of needy children.  All projects or programs that are directed at addressing social, environmental or economic concerns belong to the scope of CSR.   Initiatives dedicated to offering or improving Fundamental Healthcare, Mother and Child Welfare, Gender Equality, Education, Initiatives to help those in lower strata of society, Eradication of hunger and poverty, Environmental health, Repair off natural sources, and contributions to Condition run relief cash is however a few causes that become qualified as CSR activities.  Companies can direct their efforts towards such initiatives so that you can fulfil their CSR obligations.

With scope of CSR activities broadly defined, it may be the business to decide on the reasons it wants to support, based on its core values.

How to decide on the best CSR initiative?

As noted choices aplenty, mainly within the Indian context, where there’s much play the role of achieved to boost quality of existence in the common man, plus general adopt more sustainable business practices.  You need to realize that investments towards social causes that translate as direct benefits of the organization aren’t recognised as CSR spending.

In line with the Indian Companies Act, companies must first direct CSR efforts towards alleviating socio-economic, environmental or any other areas of concern in a variety of areas they function, rather of taking on CSR projects somewhere nationwide. Localizing CSR programs frequently prove effective because it is not just obvious to determine and recognize the problems, but furthermore place them into action and track their progress better.

That mentioned let’s check out some typical categories of social responsibilities that companies support.

Philanthropy

Identifying a social cause and donating to charitable groups associated with addressing this is because probably a quick and simple option designed for companies to fulfil their CSRs.

Eco-Friendly Operations

By using natural sources in the careful manner and tapping renewable reasons for energy, to effective effluent and waste management, companies can lead to a considerable alteration of their daily operations to lighten the duty round the atmosphere.

Human Legal legal rights and Ethics

The scope of human legal legal rights and ethics is certainly vast.  Efforts to make certain fair treatment and pay across all amount workforce without any discrimination, can be a fundamental requirement rather than really CSR. But going further to eliminate child work and poor working conditions and paltry wages especially if tasks are outsourced could be a worthy initiative.

Livelihood

Honing academic understanding and vocational skills and creating job options around their portion of operation enables local neighborhoods to thrive and prosper. Adopting entire villages and out promises to boost the local economy also prove a pleasurable cause.

Investing efforts, funds and time which are more viable and rewarding CSR initiatives requires extensive feet work.  Most considerably the chosen initiative must match the criteria outlined with the Indian Companies Act to get known as CSR.  Availing the help of professional CSR consultants for instance Fiinovation may help companies chart out a apparent CSR programme that falls while using stipulated CSR rules.