Installment Loans vs. Payday Loans: What’s the Difference?
If you need money to cover an expense, installment loans, and payday loans are two options at your disposal. Compare each loan’s features and benefits to choose the best loan for your financial situation.
What is an Installment Loan?
If you opt for an installment loan, you’ll borrow a set amount of money at once and repay it over time via fixed monthly payments or installments. Installment loans usually come with affordable interest rates and no prepayment penalties. You’ll know exactly how much you owe up front and will be able to budget accordingly.
What is a Payday Loan?
A payday loan is a short-term, small-dollar loan that you can repay the next time you get paid. The repayment term for payday loans is typically within two to four weeks. You may get approved the same day you apply and the loan considers more than just your credit score. A payday loan is a good option if you need some quick cash to cover expenses until your next paycheck.
Installment Loans vs. Payday Loans
There are some noteworthy differences between installment loans and payday loans, such as:
Installment loans can go up to thousands of dollars. Payday loans, however, are typically only a couple of hundred dollars.
You may have several months or even years to repay an installment loan with fixed monthly payments. If you get a payday loan, you’ll have to pay it back within a few weeks once you get your next paycheck.
In most cases, installment loans come with lower interest rates or fees than payday loans. Payday loans annual percentage rates (APR) can range in the three-digits.
Most lenders who offer installment loans will check your credit before they approve you. Payday lenders often check credit for payday loan approval, however, the creditworthiness requirements are typically lower than for an installment loan.
Should I Get an Installment Loan or Payday Loan?
Now that you know the difference between a payday loan and an installment loan, you may be wondering what loan is ideal for you. If you’re in need of a small amount of cash and are confident you can repay the loan by your next paycheck, a payday loan may make sense. If you’re unable to repay a payday loan or want to borrow a larger sum of money, then an installment loan may be the better option.
Advance America Offers Installment Loans and Payday Loans
Advance America offers both installment loans and payday loans that can get you the cash you need quickly. With an installment loan from us, you can get your funds within 24 hours of your application, as long as you’re approved.
If you decide on a payday loan and get approved, you can also collect your cash within 24 hours. You may receive the funds on the same day if you apply in-store, or if you submit your application online before 10:30 AM EST.