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Payday Loans vs. Installment Loans – A Comparative Study

By wimutualfunds.com | April 19, 2016 | 0 Comment

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When it comes to most scenarios, people turn to payday loans with their financial woes. However, if you get addicted to payday loans, then it can pose so much trouble for you. Therefore, you have got to be careful. You can land in more troubles if you don’t pay back the payday loans on time. Otherwise, you will be creating more trouble for you. You definitely don’t want to be in that situation. Therefore, you should understand what you are getting into before you apply for payday loans. But payday loans can be highly beneficial for those who don’t misuse it. As long as you use it correctly, you have nothing to worry about.

Definition of payday loans

First and foremost, let’s define payday loans. Well, payday loans are unsecured short-term loans. Also, payday loans are meant for small amounts of money only. Usually, you are supposed to pay the money back in less than 31 days’ time. As the name suggests, you will most likely pay back the amount on your next pay day. In most cases, you would be asked to give postdated checks to the lender. Or in simpler words, these are small loans that need to be paid back within 14-31 days.

Installment loan

Now let’s examine the case of installment loans. We are talking about the regular bank loan here. In the case of installment loan, the collateral may or may not be part of it. You are supposed to make consistent payments throughout the term of the loan. You are supposed to pay the interest amount as well. You are supposed to pay the amount every month or in a regular manner. In the end, you may end up paying 20-30% more than the original amount. In case if you delay the payment further, you will be subjected to even bigger amount of money.

Realistic and safe

Yes, installment loans can be more safe and realistic in many ways. Why is it safe? It’s safe because you are submitting the collateral and you might be in control of the payment. Since you are paying back the money in installments, it might not be a big burden for you unlike payday loans. Also, since you can schedule your payments in advance, it will be easier for you to exert control over your finances. This will allow you to pay the money back in a well-planned manner. However, the biggest problem associated with installment loans is that it is very difficult to get your loan approved at the bank.

It’s not easy to get approval

When it comes to installment loans, you can walk away with big amounts. However, you need to understand the fact that it’s not easy to get approval of the loan. The approval process might take few weeks or months. And at the end, they may reject you by showing some reasons. You don’t need to go through any of these problems when it comes to payday loans. The loan will be approved within few hours’ time and you will have the money in your account within 24 hours in most cases.

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