The differences between paylater, online loans, and secured loans are important to understand before choosing the most suitable financing option for your needs. Paylater and online loans are both provided by banks or financial institutions, while secured loans require assets as collateral, resulting in different interest rates and credit limits.
Each option has its own characteristics, benefits, and risks that must be carefully considered. To avoid making the wrong choice and regretting it later, read the full discussion in this article.
The Differences Between Paylater, Online Loans, and Secured Loans
Although all three offer easy access to funds, paylater, online loans, and secured loans have several key differences. Below is a brief explanation to help you choose wisely:
1. Definition
Paylater comes from the words pay and later. Simply put, paylater is a financing facility that allows you to purchase goods or services now and pay for them later, either in installments or in full at a certain time.
Paylater services are generally available on digital applications or platforms with a fast and practical application process. Meanwhile, “pinjol” is a common term in Indonesia for online loans. In OJK regulations, legal online lending services are referred to as Pinjaman Daring (Pindar) or LPBBTI, while the term “pinjol” in everyday use often refers to illegal, unlicensed platforms.
Official, licensed, and OJK-supervised money lending services are called online loans or pindar. These are cash loans from banks or financial institutions that can be used for both consumptive and productive needs, with an application process that involves personal data verification.
Secured loans, on the other hand, require assets as collateral, such as houses, cars, land, or deposits. In the event of default, the collateral may be seized to settle the debt. Secured loans generally offer higher credit limits and relatively easier approval processes compared to unsecured loans.
2. Involved Parties
Each financing service is provided by different institutions. Paylater services offered by licensed banks or finance companies are supervised by OJK, while paylater schemes based solely on technology partnerships require users to carefully check the legality of the financing institution.
Online loan providers often operate through standalone applications or websites. However, not all of them are legal. Illegal providers pose risks such as excessively high interest rates and potential losses for borrowers. Therefore, it is crucial to verify the provider’s legal status before applying.
Secured loans are usually offered by banks or official finance companies. The application process is conducted either directly at branch offices or through official websites, making it more structured and legally clear.
3. Risks
Paylater generally has lower limits, but it still carries the risk of default and can affect your credit history in the OJK Financial Information Service System (SLIK) if not managed wisely. Although the limits and interest rates are relatively small, uncontrolled use may encourage consumptive behavior and lead to payment problems.
Online loans typically carry higher risks due to larger limits and higher interest rates. The risks increase significantly when using illegal platforms, ranging from excessive interest, misuse of personal data, to aggressive and disturbing debt collection practices.
For secured loans, the main risk lies in the pledged asset. If repayment obligations are not met, credit scores may decline and the collateral may be seized. Therefore, installment management must be carefully planned from the beginning.
4. Purpose of Use
With relatively small limits, paylater is commonly used for low-value needs or wants, such as travel tickets, dining, or purchasing household items and laptops for daily activities.
Online loans, which offer larger limits, are often used for higher-value needs, including household expenses, business capital, or urgent situations such as paying bills.
Secured loans are more flexible, as the loan amount is based on the value of the collateral, such as property certificates. The funds can be used for major needs, for example business expansion or home renovation.
5. How It Works
Paylater operates on a “buy now, pay later” system. After activation and data verification, you can select paylater at checkout. The provider pays the merchant, and you repay the amount according to the chosen tenor, usually ranging from 1 to 12 months.
Online loans disburse funds in cash or via bank transfer. Applications are submitted through an app, and funds are released after approval. Repayment is made in installments of principal and interest based on the agreed tenor.
For secured loans, the bank or finance company assesses the collateral to determine the loan amount, typically around 70–90 percent of the asset value. After the agreement is signed, the funds are disbursed, while the asset remains under the owner’s name but is legally bound until the loan is fully repaid. In case of default, the asset may be auctioned.
6. Interest Rates
Paylater interest rates are generally lighter, typically around 0–3 percent per month. Installments feel smaller, although there may still be administrative fees or late payment penalties.
According to OJK regulations, online loan providers are subject to maximum daily economic benefit limits based on the loan tenor and must not exceed the regulator’s provisions. With longer tenors, total interest can accumulate significantly. This risk is even higher with illegal lenders, where penalties and additional charges can be extremely burdensome.
In contrast, secured loans usually offer more affordable interest rates. Since collateral reduces the lender’s risk, the interest charged is generally lower than that of unsecured loans.
7. Payment Methods
Paylater payments are made after the transaction, either in installments or in full. Payment methods are flexible, including e-wallets, bank transfers, auto-debit, and marketplace applications.
For online loans, installments are paid after the funds are received. Payments can be made via bank transfer, partner minimarkets, auto-debit, or directly through the provider’s app. Compared to paylater, online loan tenors are often stricter and may even be daily. Meanwhile, secured loans are repaid in installments through bank transfers, partner minimarkets, or by visiting the finance company’s branch offices.
These are the key differences between paylater, online loans, and secured loans that you should understand before choosing a financing option. By recognizing their characteristics, benefits, and risks, you can make wiser decisions that match your financial needs and capabilities.
If you need a secure and transparent secured loan solution, BFI Finance can be your choice. At BFI Finance, you can apply for loans using motorcycle BPKB, car BPKB, or property certificates (house/shop/office) as collateral, according to your funding needs.
BFI Finance is licensed and supervised by the Financial Services Authority (OJK), ensuring a safe and reliable process. Do not let limited funds hold back your plans. Achieve your financial goals with the right solution because #SelaluAdaJalan with BFI Finance.
