Installment and Payday Loans: Know the Difference

By on September 2nd, 2016

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Installment and payday loans are two main types of the short-term loans that are extremely popular among people, who urgently need extra money! The high demand for these types of loans makes local financial companies and their online representatives create positive circumstances for their potential clients. Unfortunately, not every company will provide the financial assistance for unemployed people but there are opportunities to apply for no credit check loan! Still, now let’s familiarize with the difference between installment and payday loans!

Installment Loans: Definition

The conception of any installment loan lies in the specific terms of the repayment process. Clients are supposed to pay off a debt in installment within a particular period, which can last from 2 months to 1 year. The period is defined by the lender according to the credit history and other circumstances that refer to the client.

The popularity of these loans lies in their convenience as paying in installments fits the strict financial reality of our days.

Payday Loans: Definition

Payday loans are the most popular types of the short-term loans. They are given to people, who are out of money. The borrowers have to pay the debt off within one month when they receive the salary. Payday credits are connected with salary as they must be paid off as soon as the borrowers get the wages.

Installment vs. Payday Loans: Differences

The key difference between these two types of the credit is the payment period: payday loans are supposed to be paid off within one month, installment ones within several months. Payday credits are considered to be the short-term loans. That’s why, unlike the installment borrowing, the possible amount of loan is small. If you apply for payday credit, you can pay it off with the help of the direct debit from your bank account.

Payday Loans: Who Fits Them?

Payday loans fit people, who urgently need a small amount of money for the expenses till the end of the month. If you don’t want to borrow funds from your family/friends, then payday loans are the best decision. So, here are two main requirements, which you are supposed to accept:

  • Small amount of money
  • Small repayment process

Installment Loans: Who Fits Them?

If you need a lot of funds and you can’t pay off the debt in one month, then you definitely need to apply for an installment loan.

Key Points of Choosing the Type of Loan

Before applying for financial support, specify the amount of the loan. If you need $100, don’t apply for $1000. Payday loans are sometimes more profitable and easy to pay off. So, if the expenses aren’t big, it’s better to choose payday credit.

It’s important to be full-time employed to apply for these types of loans, especially for installment, as a number of funds can be a lot larger.

The most important tip covers the way you pay off the debt. Don’t delay the payments and follow the strict requirements and directions of the lender. It’s the main key for success! Good luck!