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.

Payday Loan

  • 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 Loan

  • 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.

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