How is an installment loan different from a payday loan?

by Stefan Holt | Feb 15, 2017

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

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.

Payday loans

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.


Leave a comment
  1. Josie | Sep 03, 2018
    Remember that a logbook money company will need to see you are earning frequent income and also have the ability to repay the bank loan. The over-dues and college or school balances can be paid off with such direct pay day loan companies with a feature called, 'look back'. This cash advance loans direct lender can complete all the demands of the borrower such as sudden medical bills, buying groceries, house renovation, holiday package, educational fees, organizing event or weddings etc. With a good understanding of how the direct lender's short-term loan direct lender no credit check are paid off and what your state may or may not allow for payment plans, it is time to put your payoff plan together.
  2. Lala | Sep 02, 2018
    Character Also Decides the approval of 2500 personal loan no credit check: As these are high risk loans, money lenders are often consider character of the person to whom they are lending. The prospective student might cast his or her lot with a small, non-prestigious school that offers a personal loans direct lenders no credit check in tandem with a local cooperative or credit union. Could begin to stress to claim money from several lenders and although it is the primary downside ugly cash bill consolidation loans bad credit lenders only, high interest bad credit loans are frequently granted. Homeowner easiest tribal loans to get like all secured loans have generally a low APR(Annual percentage rate) associated with it, but it depends on various conditions like amount of loan, period of loan, credit history and financial situation of the country.
  3. chavez clayton | Jul 18, 2018
    The Le_Meridian Funding Service went above and beyond their requirements to assist me with my debt consolidation. They were friendly, professional, and absolute gems to work with.I will recommend  anyone looking for loan to contact.

    Leave a comment