This is a payday loan vs. installment loans post to describe the major difference between these two distinctively types of loans.
Most tend to confuse both terms which may lead to them applying for the wrong type of loan, thus incurring terms and conditions which they’re unable to keep up with, and today I’m going to show you exactly how to distinguish between them both.
When we need money it is easy for most of us to just consider calling our family or friends to loan us money, we always assume we can never be stranded; now imagine a global pandemic like the Covid-19 where everyone rich or middle class was affected without any prior warning and one is in desperate need of money but so is everyone, what then do you do?
You could use your credit card, get a loan from your bank, credit union, online lenders, or other financial institutions, but honestly, why would you want to go through that stress, compound so much debt when there is an easier, faster and cheaper way out. I mean if you have no credit or poor credit you may have limited options to choose from especially in emergency situations where you probably are in desperate need of cash.
If you are faced with this predicament you might want to consider an installment loan or a payday loan.
The best way to know which loan would be perfect for you in whatever situation would be to first learn their difference. But you don’t have to worry because that is what we are here for.
Payday Loan vs. Installment Loans – The Major Difference
Having to choose between installment loans vs. payday loans is no easy task. There is so much to consider, but before we delve into that, let us have a quick overview of the main difference between them both.
#1: What are Installment loans?
An installment loan is a type of loan that is repayable with either fixed and or regular payments over a preordained period commonly known as the term.
Installment loans are basically a type of agreement or contract involving a loan that is paid back over time with a set time of scheduled payments. The term of the loan can range from as little as a few months to as long as 30 years.
A mortgage loan is a typical example of an installment loan. There are quite a number of financial institutions that offer installment loans including credit unions, banks, online lenders, etc.
Every installment and repayment timeline is pre-schedule beforehand, while the contract is still underway and the loan is finalized.
Generally, in comparison to payday loans, installment loans offer higher and larger amounts of money.
#2: What is a payday loan?
If you haven’t already heard of a payday loan then a simple answer to your question is – payday loans are other options for you if you’re interested in borrowing money for emergencies or whatever reason and have bad credit or don’t have good credit; they are basically short term loans.
They can have a term of 31 days and sometimes fewer. Typically in order to take out a payday loan, you would have to give the lender a postdated cheque, or electronic access to your bank account and agree with the lender that by the end of your loan term, the lender can either deposit the cheque or withdraw the money owed from your bank account.
Qualifying for a payday loan is one of the easiest things to do; a payday loan application may not require a credit check, however, it is not impossible for an application to get denied if the individual applying does not meet the requirements of the lender.
For example, a person would be turned down if he or she is below 18 years old, or, if such an individual does not have a stable source of income or a steady job, and if the income is too low for the amount he or she wishes to apply for. It would obviously also be unwise to grant a loan to one who has recently declared bankruptcy or even one who bounced a cheque.
However, beyond that, the requirements for a payday loan are almost nonexistent.
Payday Loans are NOT Installment Loans
You may wonder just like I did if payday loans are the same thing as installment loans. If you did, then the answer is no; payday loans are not installment loans!
This is simply because payday loans, unlike installment loans are paid back to the lender in a single lump sum when the borrower gets paid.
Other times, payday loan payments may be divided across two repayments on two different paychecks, depending on the agreement.
However, installment loans are basically a type of agreement or contract involving a loan that is paid back over time with a set time of scheduled payments. The term of the loan can range from as little as a few months to as long as 30 years. Therefore they are paid back in installments.
But, did you know – there is such a thing as payday installment loans?
Unlike the traditional personal payday loans that we are so used to already, that must without failure be paid back by the very next payday, the payday installment loan allows the borrower to repay the loan over a longer time period with interest and in installments on days that may coincide with their paydays.
We are here to assist you in finding a reliable moneylender to solve your financial troubles without much hassle. Using our experience in the field, we will provide you the required guidance to apply and get a personal payday loan in less than 24 hours.
Short term loans are emergency credit loans that have been designed for short term financial issues. The loan amount is small and limited to a fixed upper limit. The loans are exclusively created for the short term and will become expensive burdens when extended and used for long-term purposes.
The operators of Instant Payday NV are not lenders. We are neither a bank nor a financial institution. We are not involved in the process of making credit-based decisions related to lending, offering loans, or collecting repayment.
The website has been created to act as a bridge, a connecting agent between the applicants and the moneylenders. We do not charge any fee to process the loan application or help our customers find a reliable match for a loan from a third-party lender. We do not oblige any user/ customer to contact the lender or to accept a loan application.
The data present on the website related to short-term loans and the industry practices are for information purposes only. Instant Payday NV does not collect, store, or access the details related to fees and charges levied by the lenders. We do not endorse any of the lenders in the network.
Short-term loans are not available in all states. Not every lender in the network can offer a loan of up to $1000. We cannot guarantee that the loan application will be approved by a lender. Instant Payday NV also cannot guarantee that every application will be successfully matched with a lender or that the lender will provide the applicant the loan amount.
The lenders might perform a credit check through one or more credit bureaus (which include but are not limited to the major credit bureaus) to determine the reliability of the applicant. The lender will also need to perform other verifications such as confirming the social security number, national ID, driving license number, or any other identification documents submitted by the applicant.
The terms of the loan proposal depend on the lender and various factors such as the federal laws and state laws, or industry regulations. The terms and conditions of the loan proposal will vary from lender to lender and from one application to another.
APR (Annual Percentage Rate) is the interest rate calculated per annum for the loan. Instant Payday NV is not a lender. We do not have the required information pertaining to the rules, regulations, and terms used to calculate APR by individual lenders. APR calculations vary from one lender to another, one state to another. They also depend on various factors that decide the APR of a loan. The credit rating of the applicant can be one of the reasons.
Any other additional charges including but not limited to the origination fee, late payment fee, non-payment penalties, or non-financial that include debit collecting actions, late payment reporting, etc. come under the responsibility of the lender.
Instant Payday NV has nothing to do with the payments charged by the lenders or the action taken by them. We do not maintain any information regarding the same. The charges and actions are to be fully
disclosed by the lender as a part of the loan agreement. The calculation of APR is the annual rate and not the financial charge of the product.
Implications of Late Payment
We highly recommend our customers to contact the lenders to enquire about the possibilities of late payment. In the case where late payment is considered possible, the late payment fee is applicable and implied. The laws of the state and the federal govern the cases of late payment fees and vary vastly. All details related to the procedures and costs associated with late payment are disclosed in the loan agreement. Customers should carefully review the terms before signing the contract.
Implications of Non Payment
In case of nonpayment of the loan, both financial and nonfinancial penalties may be implied. The charges for nonpayment and late payment are disclosed in the loan agreement. Additional actions related to nonpayment’s such as renewals or extensions can be implied upon given consent. The terms of renewal are disclosed in the individual loan application. Additional renewal charges may also apply.
Lenders may perform debt collection practices. The practices are adjusted as per the Fair Debt Collection Practices Act and any other federal or state laws related to the industry to ensure that the customer or the loan applicant does not end up being a victim of unfair trade practices. Most of the lenders do not use outside debt-collecting agencies to recover the loans. They use in-house methods to collect the debt from the applicants.
Late payment and nonpayment of the loan might have a negative effect on the credit rating and further decrease the rating. This may cause them trouble over time. Lenders may report to credit bureaus such as Experian, Equifax, Transunion, etc. In such instances, the late payments and nonpayment’s may be recorded and remain in the records for a certain period.