Being in a difficult financial situation is never easy. You have to find a solution that wouldn’t affect your wallet. With loan guarantees, it’s not always possible. Depending on your choice, you will have to deal with different terms and conditions.
Payday loans and installment loans Filld have always been the most common choices among borrowers. Which one of them suits you more? This is a question to be answered.
Payday Loans
A payday loan is perfect for those who need extra money until the next paycheck. It is very easy to obtain as long as you have a stable source of income. No wonder approximately 12 million Americans use this loan product every year.
To enjoy payday funds, you need to find a reliable lender and submit an application with it. You can get approved instantly. Then, you will need to read through the agreement and put your signature on it.
You will most likely have high-interest rates and possible service fees to pay in addition to the requested amount of money. The repayment period won’t exceed 31 days.
Installment Loans
Installment loans have become a good solution for those who need a bigger amount of money and for a longer period of time. They have the same application process. However, the repayment usually involves a series of payments to be paid off within several months or even several years. After full repayment, you will be able to request the given type of loan again and again.
Comparison
While payday loans and personal installment loans are both known as “small-dollar, high-cost” loans, they are often confused by first-time borrowers. However, there are some serious differences that can help you make the right choice.
Payday and installment loans usually have different limits, which depend on the lender and state law. For example, the maximum payday limit is $1,500, the maximum installment limit may involve thousands of dollars.
Payday loans come up with higher fees and interest rates, and they must be paid off all at once. Installment loans are more expensive due to the longer repayment period.
But it is your only solution if you need to borrow a large amount of money. What’s good is that both payday loans and installment loans can be renewed after your previous loan is fully covered. Keep this in mind when making the final choice.
Which type of loan is right for you?
After making your options clear, there are a few questions to ask yourself. You simply need to find out which type of loan suits you best.
How much cash do you need?
If you need a small amount for a short period of time, consider a payday loan. Larger amounts of money are offered by installment loans. The logic here is simple – the more money you borrow, the more time for repayment you need.
How will you deal with payments?
If you can pay back your loan in a short time, you should consider taking a payday loan. If you need a longer amount of time to cover your debt, you will have a better experience with an installment loan.
What to Choose if Your Credit Score Is Low
If your credit history is bad or non-existent, you still have some loan products to choose from. Both payday and installment loans are offered to bad credit holders at Just Right Loans. However, they usually come with tougher terms and conditions. For example, you will need to prove that you can afford a loan.
Are you able to pay off your loan? What kind of income do you have? If you have a monthly salary or deposit interest, you have a good chance for a positive verdict.
If your credit history is good, you won’t have problems getting payday and installment loans in most cases. However, you may still need to demonstrate your financial situation, depending on the requested amount of money and repayment period.
The kind of loan you need is based on what works best for you. Both payday and installment loans provide immediate financial support. At the same time, they require some effort on your end to be able to fulfill your borrower obligation in a timely manner.
Regardless of your credit score, you should use loans only when necessary. Otherwise, you may fall into a debt cycle for a while. As long as you do your research and know what you go for, your loaning experience should be as smooth as possible.