A distinctive feature of all installment loans is that you need to pay them in multiple installments. These payments are usually made once a month or more often. Pre-payday loans are paid in a single payment from the next paycheck. This is the main difference between payday loans and installment loans. A payday loan is already initially designed for borrowers with a bad credit history. Therefore, you will definitely be waiting for approval on the loan, except in rare cases. Such a loan won’t have time to accumulate interest, and you can easily pay it off, so a payday loan is the most suitable loan for people with a bad credit history.
Short-term loans are convenient not only for people with a bad credit history, but also for any clients. You will be able to receive money in any case, even if no other credit or other methods of receiving funds are available to you. These loans are easy to get, as they don’t require collateral. Therefore, you can get funds even without the initial investment. Installment loans and payday loans are safe, fast and very convenient, as you submit a loan request through the lender’s website or app. These loans won’t cost you much money, so you don’t have to be afraid to take out a short-term loan.
DIFFERENCES BETWEEN A PAYDAY LOAN AND AN INSTALLMENT LOAN:
- At the end of the loan repayment period, the amount you borrowed will be withdrawn from your Bank account by check or by the details of your account that you issued or informed the lender in advance.
- Lenders won’t check your creditworthiness or credit rating if you take out a $100 or $400 payday loan.
- The loan is repaid before paycheck in one payment, which must be made the day after paycheck, or within one or two weeks.
- Interest rates can be very high up to 300%, especially if you have a bad credit history.
- The installment loan can be repaid after several months. However, you can take out a loan for several years.
- Before approving an installment loan, the lender will check your creditworthiness. This is necessary to ensure the lender’s confidence in your competence and in the availability of sufficient funds to repay the loan.
- You can pay off a loan in installments by phone, by check or online in the app or on the lender’s website.
- Interest rates aren’t high. Usually, the interest rate of an installment loan is 36% maximum. You can find a lender that will give you a loan with lower interest rates.
WILL PAYDAY LOANS AFFECT MY CREDIT SCORE?
Payday loans or installment loans can help your credit rating, or they can also harm it. This depends on how seriously you follow the lender’s rules and on the timely payments that you will make. Short-term loans will improve your credit history and show yourself as a conscientious person if you comply with all the lender’s terms and conditions. But if you can’t repay the loan amount or miss payments, such actions will worsen your credit history.
If you are afraid of forgetting to make a payment, you can use automatic payments. To do this, you need to open a Bank account with access for you and your lender. This way, payments will be automatically debited to their account, or the lender will be able to withdraw funds from your account at the right time. Many lenders also make an additional discount for paying through such a Bank account. This will be a big plus and will save you from many problems, as well as keep your credit history in good condition.
First, you should review the terms and conditions of lenders and choose the loan with the most suitable conditions for you. Then go to the lender’s website or app and submit your application. It only takes a couple of minutes to submit your application. Prepare your documents in advance and make sure that you meet the lender’s requirements. Requirements may vary from state to state, so you should check with the lender to find out what you are interested in. But usually they are something like this:
- Be of age
- Email address
- Bank account
- ID card (passport, driver’s license, birth certificate)
- Phone number
HOW DO I REPAY A PAYDAY LOAN OR INSTALLMENT LOAN?
Most lenders allow you to pay off your loan in installments in equal monthly installments. However, there are lenders that accept payments for payments every 2 weeks. This method is also profitable, since you will get one additional payment. Payday loans must be repaid in a month from the next salary. During this time, the amount of interest does not accumulate much and you can easily pay off the loan. You will not be paying off the loan for a long time, so you will have time to use the money and return it, without unnecessary expenses. In payday loan and installment loan some lenders will ask you to choose a payment method. And you can also change the payment date if you have financial difficulties and cannot make the payment.