Are Payday Loans and Installment Loans the Same?
All the loans that have a maximum repayment period of one year can be classified as short-term loans. It does not make them necessarily the same. Payday loans as well as installment loans (small cash loans), both come in the category of short-term financing. Low-income households depend on these financial products regularly to address cash shortage. They both are easy to avail. Some people even consider that a payday loan is an installment loan. Is it correct? Do you think they are same or a payday advance is different than an installment loan? Let us compare them both to give you a clear understanding.
- A payday loan is a collateral-free loan, often used to get cash between $-100 to $1,000.
- Most lenders like EZPaydayCash do not run a traditional credit check process for such debts.
- A borrower while taking out the payroll loan agrees to pay back the principal along with interest and fees when he gets the paycheck- that day gets scheduled.
- In most cases, nowadays, especially the online direct lenders automatically recover this amount from the bank account.
- The payment due is strictly the salary day, and the payment should be done in one transaction. If the borrower is not able to do that, s/he must ask for a rollover well before the due.
- A payday loan usually does not have any severe impact on the credit status.
Due to such conveniences, payday loans have become the immediate solution to cash crisis for millions of debtors.
- Installment loans can be short-term cash loans as well as long-term mortgage loans; anything between $100 and a several thousand dollars. The cash loans are a bit similar to the payday loans and may not need collateral, yet not the same. For a mortgage, one needs collateral.
- Lenders like CashAmericaToday do not check credit scores for cash loans. When it comes to a mortgage or auto loans, one needs to have good credit, though.
- With an installment loan, debtors get to repay the loan in multiple scheduled payments. For example, if the term for a cash loan is 3 months, the borrower makes 3 monthly or 6 biweekly scheduled payments.
- It gives more time to repay and the interest rate is less than payday advances.
- Might have a long impact- both positively and negatively- depending on if the borrower makes the payments on time.
As you can see, the two financial products are quite different from each other. Therefore, a payday loan is not an installment loan.
The interesting and a beneficial thing for the borrowers is that, CashAmericaToday offers payday loans -without credit check- that can be paid in installments! In a way combining positives of both loans to help you in cash emergency! Apply now to avail quick cash.