Do you want a loan but are confused about which one to apply for? Are you confused between a Payday loan Vs Installment loan? Do you want to know the difference between Payday loans Vs Installment loans? Do you want to know which loan is best for you? If yes, then you are at the right place.
Here we are going to tell you about the difference between a payday loan vs installment loan. We are also going to discuss the details of both loans, their pros, and cons. In the end, we will tell you which loan would be perfect for you.
Do you know that more than 43% of Americans have savings of less than $1000? So many people take loans to meet their emergency expenses. We suggest you have at least $5000 in your emergency funds so that you do not have to go for a loan. But even if you have to take a loan, let’s find out which one would be best for you.
Payday Loan Vs Installment Loan
Both, payday loans and installment loans are short-term loans. You can get these loans from direct lenders, loan-providing apps, or online lenders. Now let’s get into the details of payday vs installment loans.
As the name suggests, these loans are given to the borrower till his next payday. Usually, people who need a small amount of money urgently for a very short term go for these loans. You can get a payday loan from online direct lenders or instant loan-providing apps.
There are many apps like PayDaySay, Dave, MoneyLion, etc. which provide payday loans.
If you want to apply for payday loans then you should have a stable monthly income otherwise, you would not be able to get a payday loan. You need to provide details about your job and your payday to the loan provider.
The best part about these loans is that even if you are denied by the bank because of your bad credit, you will get a payday loan anyways. These loans can help you with emergency expenses that might damage your budget otherwise. You can find many online lenders which provide payday loans at a very low-interest rate.
- Easy to apply and early deposit.
- You can get a loan on bad credit as well.
- You can apply for these loans online while sitting at your home.
Do you know what is the best thing about installment loans? You do not have to repay the whole loan at one time. Imagine if you had an accident and your car needs repair. You have a stable income but you cannot repay the whole loan at once because then you will have to compromise with other expenses. In such situations, installment loans are the best option.
Once you take an installment loan, you can repay the loan in installments which can be monthly, quarterly or so, depending upon the terms and conditions of your loan. But, you will not have to repay the whole loan at one time. You can take these loans from online loan providers or banks.
If you have a bad credit history then the bank might deny your loan request. But you can still get an installment loan from online loan providers or direct lenders. You can get more money as loan in installment loans as compared to payday loans.
- Fixed monthly payments.
- Easy application.
- Early deposit.
- Comparatively low interest.
Payday Loan Vs Installment Loan: Which to Choose?
If you are confused between installment loans Vs payday loans and cannot decide which to choose then let us help you. Before going for any of these loans, consider the following points-
- How much money do you need? Is it more than $1000?
- Do you have a good credit history?
- Do you have a stable monthly income?
- Would you like to provide all the documents?
- Can you wait for some time?
If your answer is yes to all then installment loans are the perfect choice for you. Installment loans are usually provided by the banks so you will have to complete their paperwork then only the money will be deposited into your account. You will also need to provide your documents like identity proof, income proof, etc.
On the other hand, if you need a small amount of money like $200-$500 then it is better to go for payday loans. There is no reason to pull this small loan for months. If you need the money urgently then also payday loans are the best.
Some Other Options
If you do not want to go into the procedure of applying for a loan and doing the paperwork then credit cards are the best. If you own a credit card, you can use it whenever you need money but you do not have it. You need to pay the credit card bill later.
Credit unions provide low-interest loans to their members. If you are not a member of a credit union then you cannot apply for a loan there. They provide low-interest, short-term loans. If you have bad credit then you cannot get a loan from a credit union.
Banks are the best place to take loans from. They provide low-interest loans and you cannot doubt their reliability. The only problems are, their procedure is very lengthy and takes days to complete and if you have bad credit, your loan application is going to be denied.
Instant Cash Apps
Instant cash apps are loan-providing apps that provide payday loans to people. They have a very easy application process and make the deposit within 1 or 2 days of application approval. You can apply for loans via instant cash apps while sitting at your home just with the help of your mobile and internet.
It is always better to have savings so that you can rely on your own money instead of taking a loan. But, even if you have to take the loan, make the decision wisely. Do your research and find out which loan would work best for you, a payday loan or installment loan, and then only make your final decision.
Frequently Asked Questions
Q1- What are alternatives to payday loans?
If you do not want to take a payday loan then you can take an installment loan. If you need a bigger amount of money as a loan and you cannot repay the whole loan at once then an installment loan would be best for you.
Q2- How much of a payday loan can you get?
The main problem with payday loans is that you can only get a little amount of money in loans. The maximum you can get is a payday loan of up to $1000. Most instant cash apps and online direct lenders provide a payday loan of up to $500.
Q3- When to take an installment loan?
If you need a bigger amount of money and you cannot repay the whole loan at once then you can go for an installment loan. You will have to repay the loan amount monthly until the whole loan is repaid.