If you are facing a financial crisis, taking a loan might be helpful. But it is not that simple. There are different types of funds available, all of which fall under two basic categories. One is the PAYDAY LOAN and second is the INSTALLMENT LOAN.
These two have some common features and a number of differences as well. You need to decide which one you want to take. This choice is very important as the right choice would be helpful to you in the long run. Before making any final decision, you should know what facilities each one provides and what are the terms and conditions of the both. Keeping in mind all these points, you can easily choose, which is better for you.
This is also known as check loan. This one is short termed and is often provided by the load agencies. It is easier to get as the terms are relatively simple. You can simply get it if you are employed and have a stable job. It has to be paid back all together via a paycheck and does not include any collateral. It includes a high rate of interest and at the due date, you have to pay back all the money borrowed with the fee and interest.
There are numerous agencies out there that offer this kind of loan. Moreover, it is also provided online. The trend of online payday loans has recently been increased which has made it a lot easier.
A payday loan is easier to get as it does not include any credit check. You just have to pay it back on time. If you fail to do so, you will have to renew it with the heavy interest rate.
As the name indicates, it facilitates the borrowers by allowing them to pay back the money in installments. When you take the loan, the time limit is decided in which you have to repay in a number of installments. Most of the loan types fall under this category and its rate of interest is less as compared to the Payday loan.
The payment of installments is decided by the lenders who try to keep it easily manageable for the debtor. Installment loans require proper documentation and the approval takes about 24 hours.
Now let us have a look at the plus points of both the kinds so that you can easily make your choice.
Advantages of Payday loan
The quick way out-Just fill a form and you will get the money in no time.
Easy to get-No strict terms and credit check requirement.
Convenience- Availability of numerous companies providing Payday loan and the online facility has made it very easy for all.
Advantages of Installment Loan
Long Term- It gives you sufficient time to payback.
Easy Repay- Instalments makes it easy for the borrower to pay back the loan amount.
Scheduled Payments- the Proper schedule is made and the borrower knows when and how much he has to pay and he can manage accordingly.
Everything has its pros and cons and same is the matter with both these loan types. Have a look at these.
Disadvantages of Payday Loan
Short-term- The whole of the money is supposed to be paid back with n a short period of time.
High-Interest Rate- Everything has its price. You can get the loan fast and easy but you will have to pay back with huge interest.
Expensive- You may find it convenient for a moment but it is more costly as you will have to repay including the fee and high interest.
Disadvantages of Installment Loan
Penalties- Although the date and payment of each premium are pre-decided, if someone fails to pay on time, huge penalties can be charged.
Secured- Some kinds of this load ask for security. It can include your property, home or a car.
Which is better?
After considering the basics, plus points and drawbacks of both, you can now reach to a conclusion that which is more suitable for you.
Before making a final choice, consider the following factors:
The amount of cash and duration of time for which you need money.
1. If you need a small amount in some emergency situation or for a short time, it is better to go for Payday.
2. However, if you are in need of large amount, you should apply for installment loan as it would be easier for you to return it.
1. If you have a good rating, you can get the installment loan very easily.
2. On the contrary, payday is the right option for those who donít have a high credit rating.
1. If it is a small amount and you find it easy to pay it back all together, it is best for you to take payday.
2. A large amount of money is not easy to return in one payment, therefore, if you plan to payback in a number of easy premiums, your choice should be installment load.
Most importantly, you have to have a clear idea about how it can affect you and your credit if you fail to return the loan in the given time.
In case of installments, if you are unable to repay on time, it will have a negative effect on your credit score. Moreover, you will have to pay with extra charges.(It depends on the agreement)
If you are incapable of paying back the Payday loan on time, you are in trouble. You will fall in a never-ending cycle of debt. You will be trapped for long. I know that sounds scary and it actually is. Therefore, one should be very careful in choosing the appropriate option.
To sum up, better is the one which is more apt for you. Keep all these above-mentioned points in mind and think properly. Your credit score, your ability to repay, the amount range, and the time in which you can comfortably refund determine which one is better for you.
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