The main difference between a payday and installment loan is that the latter grants much more flexibility in terms of loan conditions and interest rates. In Installment loans, one can repay within several months to a year.
A payday loan is generally known as a 30-day loan that lenders provide for emergencies. The borrower typically pays off the total sum within 2 weeks.
With lenders expanding and making swift changes to rigid loan repayment structures, one can now avail of payday loans with flexible repayment structures. It is the primary reason behind the confusion regarding both loans’ usage. Individuals often believe these loans as one, but they differ significantly from each other.
Let’s first know-
What are Payday Loans?
Payday loans are salary-day loans for people needing instant credit regardless of the less-than-ideal profile. One can borrow a small amount (£1500) to meet an emergency cash crisis. Payday loans do not call for a car or home as a security over loan. These are no collateral and swift loans that one may qualify for and get the sum the same day.
Payday loans generally call for a borrower to pay the loan payment in a single lump sum on a dedicated day. Borrowers can apply and choose the repayment structure basing income and other liabilities. One can use these loans for any small need.
How are Payday loans useful for bad credit profiles?
Individuals with bad credit often find it challenging to qualify for minimal cash from mainstream lenders. In situations where you need urgent medical requirements in unemployment, you panic. You hit every single prospect sharing any possibility for some urgent cash. But you soon run out of it.
What next? Delaying the treatment owing to a slight cash shortage can increase the severity of the impact. Here it would help if you had constant support with rare possibilities of rejection.
What could be better than getting no-obligation cash without credit constraints in 10 minutes? Call us for payday loans and get guaranteed acceptance. Yes, we provide these quick loans by accepting maximum applications and sharing the slightest possibilities of loan repayment. It eliminates any fear of missing out and attending to needs in time effortlessly, so if you have any short-term needs or need small cash to bridge the difference.
What are Installment loans?
Installment loans are products with a contract in which one pays the loan amount in defined installments for a dedicated time. The loan term could be anywhere from 1-30 years.
One can use it for mortgage payments, student finance, or home improvement payments. It is for individuals seeking a big-ticket purchase but lacking the finances to pay to cover the cost with an upfront payment. Here it differs from payday loans which require a single lump sum.
Installment loans can be secured or unsecured. It implies a lender may call for collateral if you need a high sum on bad credit. Credit score plays a significant role in deciding the loan terms for the borrower. Low-credit profile calls for competitive loan terms.
| Advantages of Payday loans | Advantages of installment loans |
| It is ideal for individuals with low income and bad credit to fetch an immediate sum | It is ideal for individuals needing big-ticket items without paying it all upfront. Salary may not suffice the amount. You can use it to bridge the amount |
| There is a 14-day cooling period wherein you can cancel the loan if you do not find it suitable for the circumstances. | Installment loans lack this flexibility. |
| You can repay the payment loan early if the lender allows prepayment and this boost the credit score. | Installment loans do not affect the budget or finances with fixed repayments. But you lack the flexibility to settle the loan early. |
| Payday loans require only a soft credit check for affordability. The check does not impact the credit score | Installment loans call for a hard credit check that may impact the credit score. But, making timely or large payments(sometimes) throughout the repayment period can help improve it. |
| You can refinance only if you have too many payday loans or high-interest loans, but not a single payday loan. | Can refinance these loans for better interest rates and terms. |
It clearly states how to simplify different cash requirements with various loan products. However, if you still need clarification regarding usage, read ahead.
Should I Go for a Payday or Installment loan for my need?
Both loan products help you track your finances and update your credit score. Managing it impactfully can help you qualify for better interest rates. Before choosing between the two, analyze the need, urgency, and affordability. You may go for payday loans if you have a short and emergency requirement and the flexibility to pay in a single lump sum. It is ideal for employed individuals with regular income sources.
Conversely, if you have sincere financial issues, are shifting income, and still wish to improve your lifestyle, you may go for seamless installment loans. In these situations, one may find it almost impossible to pay effortlessly. Or it may impact the budget drastically.
At the same time, you are deciding on prime sustainable requirements. If the repayments do not impact minimal sustainable requirements, payday loans are ideal, and vice-versa. Because, in the end, you must be able to manage the repayments smoothly. It is only possible if you have clarity over income, monthly budget, and liabilities.
On the other hand, Installment loans cost you more eventually as they have more extended periods. Longer periods may ease the repayments, but interest rates increase the loan amount.
This thing runs absent from payday loans. It is free from economic uncertainties and ensures prompt repayment with affordable sums. Therefore, only extend terms if you believe you can pay it in one lump sum. You could be paying more towards the loan in that case.
So, check payday loans on guaranteed acceptance available or not if you are clear in purpose, need quick finance, and do without any collateral or credit score baggage. Ours is a flexible structure catering to specific needs. We provide expert guidance on managing other high-interest loans in your credit profile and payday loans. So you do not stress over default.
Bottom line
Before going for Payday or Installment loans, identify the pros and cons of each. Payday loans are exceptional for emergency requirements. Choose the right for your needs. The primary difference is the repayment period. Contact us for any loan requirement; we are happy to help.
Jessica Rodz is the Senior Content Writer at Cashfacts. She has a long career in the field of content writing and editing. Jessica has the expertise in the UK lending marketplace where she has worked with 7 different lending organisations and acquired many responsibilities from preparing loan deals and writing blogs for their websites.
At Cashfacts, Jessica is managing a team of experienced loan experts and doing a major contribution in guiding the loan seekers via well-researched blogs. She has done graduation in Business (Finance) and now currently doing research papers on the UK financial sector.
