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When you take an installment loan, you pay it off over a predetermined term in fixed monthly installments. A payday loan is for short-term financial issues. Amounts are smaller compared to installment loans, subject to state regulations.
You can borrow thousands of dollars in installment loans. Direct lenders typically offer up to $5,000. When talking about payday loans, we refer to small dollar amounts, such as a couple of hundreds. A payday lender will usually be able to provide you with up to $1,000.
Installment loans span over several months, sometimes even years, depending on the loan amount. Payday loans usually must be repaid in a few weeks or on your next payday.
When borrowing money from online lenders, you need not worry about having a less-than-perfect credit score. Direct lenders will either do a soft credit check or not look into the matter at all.
The interest rate on installment loans depends on the exact terms. Payday loans have a fixed rate. Fees range between $10 and $30 for every $100 borrowed.
To qualify for both installment and payday loans, applicants must meet a set of basic requirements. These typically include being American citizens or permanent residents, owning a bank account, having a steady job or a recurring source of income, being 18 or older. Borrowers usually find it easy to qualify for installment and payday loans.
Once the applicant agrees with the terms and signs the contract, the lender deposits the funds to the banking account provided. The typical term for that is usually up to 24 hours.
Loan Choice Choosing between installment loans and payday loans is a matter of priority. If you need a small loan that you can repay from your paycheck, a payday loan will suit your goal. If you need a larger amount and are willing to pay off your debt in monthly payments, go for an installment loan.