Lack of collateral is the most favorable term there is. Collateral is what you use when someone isn’t sure you’ll pay them back. You say ”okay, well if I fail to pay back [this car loan], you can take [the car] and keep any of the money I did pay you.”

If a bank is giving someone an unsecured loan, they are supremely confident that they will get their money. It’s the single greatest indicator of confidence in financial health and reliability possible.

And before you come in with “muh payday loans are unsecured,” payday loans are an entirely different animal. They’re designed to exist for people who can’t offer collateral because they’re so desperate for a relatively small sum of cash they don’t have a proper form of collateral they can put up. The terms are extremely short, usually month-to-month or even week-to-week intending only to last to the borrower’s next paycheck, and are usually known for extremely high interest rates (because this high return on investment is how lenders compensate for the risk).

To call this a payday loan is to compare a set of terms, cash amounts, and entities involved so different that you may as well be saying “Amazon is in trouble because they had to take out a loan to build a data center, but my buddy just bought a laptop and paid cash.”

You understand that “lack of collateral” is the most favorable term there is? Collateral is what you use when someone isn’t sure you’ll pay them back. You say ”okay, well if I fail to pay back [this car loan], you can take [the car] and keep any of the money I did pay you.”

If a bank is giving someone an unsecured loan, they are supremely confident that they will get their money. It’s the single greatest indicator of confidence in financial health and reliability possible.

And before you come in with “muh payday loans are unsecured,” payday loans are an entirely different animal. They’re designed to exist for people who can’t offer collateral because they’re so desperate for a relatively small sum of cash they don’t have a proper form of collateral they can put up. The terms are extremely short, usually month-to-month or even week-to-week intending only to last to the borrower’s next paycheck, and are usually known for extremely high interest rates (because this high return on investment is how lenders compensate for the risk).

To call this a payday loan is to compare a set of terms, cash amounts, and entities involved so different that you may as well be saying “Amazon is in trouble because they had to take out a loan to build a data center, but my buddy just bought a laptop and paid cash.”