Comparing Payday Loans and Short-Term Installment Loans: An Overview!
Unforeseen expenses, unpaid bills, and unsettled debts – There are varied reasons why you may need quick money. Sometimes, all we need is immediate cash, and there is no time to wait for days for an approval. That’s exactly where short-term loans come in handy. Services like Net Pay Advance offer varied kinds of short-term loans, such as installment loans and payday loans. In this post, we are comparing both the choices with aspects that are worth knowing.
How are installment loans different from payday loans?
Payday loans are to be paid in full on the due date, which is your next pay day. On the other hand, installment loans are paid in installments, and an amount will be deducted every day for the term of the loan. The term for payday loans is between 7 and 31 days, while for installment loans, the maximum term can be 180 days. Also, you can borrow more through installment loans. Depending on the lender or the state you live in, you can expect to get as much as $1,500 through installment loans. Payday loans allow you to borrow up to $1,000.
In terms of similarities, both installment loans and payday loans are short-term loans, and these are approved without any need for a collateral. Also, you should know that there is a processing fee that’s payable for both types of loans. Given that there is no credit check, and no need for an asset, both installment loans and payday loans have a higher rate of interest. In simpler words, you will pay more in terms of costs.
What’s the best option?
There is no straight answer to that. For some applicants, installment loans are better, because they have more flexibility to repay the loan, while others who need a smaller amount like payday loans, because they can be done with the loan on the next pay day. The best idea is to do some initial homework on short-term loans, and if you have any confusions, you can always choose to talk to the lender and seek their support. It is important to select a reliable and trusted short-term loan lender for your needs.
What are the requirements?
For both types of short-term loans, you must be 18 years of age or older to apply, must have an active bank account, a credible and stable source of income, and must furnish your identity proof and address details. You can check with the lenders directly to know more.
Other things to know
Just because you can get approval in a day, it doesn’t mean you should use installment loans or payday loans to cover up for unforeseen expenses or reckless spending. Always plan your budget every month, and make sure that you are capable of repaying the loan in time. Some lenders do offer an extension of two to three days for payday loans, but check relevant terms and conditions.
Used for the right reasons, installment loans and payday loans can be great tools to sail through a tough month.