If you are low on cash and you have less than perfect credit then the only option would be to borrow from a friend or get a payday loan, right? Not anymore. Now there are two options for people with a lower credit score who are searching for a loan, payday loans and Installment loans. Both options have their ups and downs, and now you have more of an option when searching for a loan that is right for you. Use this guide to weigh out the Pros and Cons of both payday and installment loans to help you choose which loan is best for you.
Payday Loans are a great short term money fix if you need some extra cash until your next paycheck. They are fairly fast and easy to obtain, and are still a pretty great option if you are in a crunch. Millions of Americans still rely on payday loans to get them food, gas, and emergency expenses between paychecks.
- Basically anybody can get one whenever they want.
- An easy way to get a $100-$1000 loan to help you to your next paycheck.
- You can pay off your loan fast.
- Most lenders don’t even perform a credit check.
- Your loan amount is limited.
- You have less control over how much you borrow.
- If you need more time to pay off your loan it will cost more.
- Direct deposit payments may lead to overdraft.
- Not paying on time leads to higher loan cost
Installment loans are different in more than one way. When you get an installment loan you have the option to borrow a larger amount. This is made possible by the payment structure of installment loans. When you receive an installment loan your payments are set for a specific amount each month, although you may pay more than the set amount to pay off your loan faster.
- You can borrow $100-$3000 or higher from most installment lenders.
- You have a set payment schedule.
- You do not have to pay off your loan with your next paycheck.
- Less than perfect credit is accepted.
- If you have outstanding payday debt it should not affect getting an installment loan.
- Applying is fast and easy, usually online.
- Lower loan approval rate than payday loans
- Long term payoff is not the best option for everybody
- High APR.
As you see both Payday and Installment Loans have their ups and downs. But that at least gives you options. For instance if you need 4 new tires for your car a payday loan may not be the right option for you because they will want that larger amount of money back within a few weeks. But if you cover the cost of those tires with an installment loan you can pay off the loan throughout a few months making your payments more manageable. On the other hand, if you need groceries for the weekend you probably don’t want to take out a loan that you will have to pay off over a longer term, so payday may be a better option. Use your intuition as well as this guide and you will have no problem picking the loan that is right for you.