When it comes to getting a lump sum of money for any sort of financial need, may that be personal or for business, people tend to get confused very easily. There are so many options available nowadays and the biggest challenge lies in the fact that when you ask people for a recommendation they say many things which might confuse you even more.
People who need cash right now can opt for either payday loans or installment loans. These two are different kinds of short term loans designed to make things easier for people.
This blog is meant to solve your problems and answer all your questions about payday loans and installment loans so that you can choose judiciously.
What is a payday loan?
A payday loan is quite common and popular kind of short term loan. When a borrower borrows a specific sum of money she/he needs to pay off the debt within one month or so or as soon as they receive their salary. These loans are designed so that a person can tackle an unforeseen financial crisis on emergency basis whereas in case of an installment loan the borrower gets ample amount of time to pay off the debt including the interest on the principal amount. The timeline of an installment loan can range between 6 months to one year or more (just an example). Payday loans are generally taken in small amounts, which is why the tenure is also pretty short. But in case of some installment loans, the amount can be huge and that’s why ample time is given to the borrower to pay off the loan.
Payday loans are perfect for people who are temporarily out of cash and need a small amount of cash to handle the temporary financial crisis hence the repayment process is also simple and short.
What is an installment loan?
Installment loans, on the other hand, are perfect for people who want a pretty huge amount of cash and who will require more time to repay the loan. In case of some installment loans, you have to first qualify to apply for the loan. However, some installment loans are available online and are pretty convenient as many companies now don’t worry about your credit score much as long as you are capable of paying off the loan within the specified period.
Installment loans can be complicated too, as some companies are pretty strict and impose a lot of restrictions on how you choose to spend the amount. Suppose you want to borrow money for your business-related needs then go for installment loans and apply now if you need cash…because you’ll get enough time to pay off the debt plus the amount to be paid monthly will be less, naturally, because of the stretched time frame. The installment loans initially can impact your credit score a little bit with time as you settle down things will be easier for you and your credit score will improve.
Which is more suitable for you?
The things that you have to keep in mind before opting for any of these two loans-
- Payday loans are beneficial but be specific regarding the amount you want to borrow.
- Payday loans are more flexible as the lender doesn’t impose restrictions but you have to pay the debt as soon as you receive your salary and you can pay it with the help of your debit card.
- Make sure that you have a full-time job before you apply for any of these loans because you have to pay monthly installments in case of installment loans.
- Don’t be a defaulter because that will affect your credit score.
- In the case of installment loans, you might be asked to keep your assets in line. This is done so that the lender can be sure of the fact that in case you fail to pay off the loan they won’t have to incur any loss as they’ll be able to forfeit your asset and get their money.
In case of both types of loan, you can always apply now if you need cash and both the systems are pretty popular among people these days for the sheer convenience and swiftness of getting urgent credit.