If you need a fast cash loan and traditional banks haven't met your needs, you might consider an installment or payday loan solution. You may also be thinking they're both basically the same thing. Not true.
Installment loans and payday loans are very different. In this post, we'll discuss both options so you can determine which small loan is right for you.
Installment loans offer you the opportunity to get the funds you need quickly with an affordable monthly payment. Smaller installment loans are commonly offered between $300–1,400. To obtain one, you simply apply for the loan, and once you’re approved your loan will be provided along with a fixed interest rate and terms outlining your payment structure. Installment loans are a popular option because they allow you to enjoy a higher borrow limit and longer loan term than a payday loan or a cashadvance option.
Installment loans typically span between six and twelve months, during which time monthly payments are made.
The first thing you’ll notice when comparing payday loans to installment loans is that payday loans are commonly smaller in every way. Often the amount borrowed is smaller, and the turnaround time for paying that money back is much smaller, too — usually just a couple of weeks.
Paydayloan providers may ask you to write a check for the loan ahead of time, including a tackedon fee, and they'll cash this check on the agreedupon date instead of waiting for you to repay. The fees are often very high and in the case of larger loans, you may have to hand over some other type of collateral such as your car title. Some paydayloan companies may allow you to extend a loan if you can’t pay it back on time, but be aware doing so may add more fees and further increase the bill you have to pay for the sum you initially borrowed. Many have cited this as falling into "the payday loan trap."
Finding the right option for you
If you are researching quick cash options, it might be because you have run into unexpected circumstances such as a car accident, a major hospital bill or the loss of a job. In many cases, these situations are not resolved in the brief period of time before a payday loan will be due.
Instead of falling for the payday loan trap, look for an installment loan option offered by a reputable company that will work with you to solve your financial problems, rather than adding to them.