Stunning Finance

Payday Loans vs. Traditional Instalment Loans

There are many things that separate payday loans and instalment loans, and the more you learn about them the more you will benefit personally. Over the years payday loans have risen quite a bit in popularity, and there are a number of reasons for this. Those who are in need of money fast will find that getting a payday loan could be extremely helpful in many ways. Instalment loans can help some people, but there are quite a few downsides to them that you should be aware of before deciding whether or not to fill out an application.

Payback Period

The payback period of short-term loans is typically about two weeks, whereas instalment loans can give people months or even years to pay back the full balance of the account. This is because short-term loans give out significantly smaller amounts than most instalment loans. One of the big benefits that are associated with payday loans is that the payback period is so short, so you don’t have to pay as much interest on top of the principle. It is important to keep in mind that having more time to pay back a loan isn’t necessarily a good thing.

Borrowing Amount

People can typically borrow more money with an instalment loan than with a payday loan, simply because the payback period is much longer. Those who apply for a payday loan can borrow anywhere from £50 to £2,000. Instalment loans regularly give individuals tens or even hundreds of thousands of pounds. Most people who want to buy a new car or home get an instalment loan, whereas those who need to cover a sudden and important expense take out a payday loan.

Lenders

You will find that instalment loans are typically given out by banks or credit unions, whereas payday loans are given out by private lenders. There are many different private lenders that you can get obtain a payday loan from, but it is important that you take the time to find the right one. You should keep in mind that the lender you choose will ultimately determine your interest rate as well as the rest of the terms of the loan.

Requirements for Approval

While it’s true that there are some basic requirements for approval that are shared by payday loans and instalment loans, the overall standards for payday loans are much lower. It can be very tough for those with bad credit to get a traditional instalment loan from a bank, but this is not the case with payday loans.

People with bad credit get approved for short-term loans all the time, which is just one of the reasons why they have become so popular. If you have been turned down for loans from your bank before because of bad credit, it is important that you consider applying for a payday loan. You must be over the age of 18 with an active checking account to get either one of these types of loans.

How You can Use the Money You Borrow

Another glaring difference between payday loans and instalment loans is how you can use the money you borrow. Most banks will ask you how you intend on using the money you want to borrow, but you won’t have to deal with that when applying for a payday loan. Those who apply for payday loans won’t get asked what they need the money for, so they can spend it any way they want. This really adds to the convenience of short-term cash advance loans, and it’s something you will want to keep in mind.

Getting Your Money

It can take up to a couple of weeks to get the money you need with an instalment loan even after you have already been approved. If you get approved for a payday loan, you could get your money within 24 hours of submitting your application. Most people who get approved for a payday loan don’t have to wait nearly as long as those who get an instalment loan. This is why payday loans are perfect for sudden emergency expenses that absolutely cannot wait. If you need money now, you should think seriously about applying for a short-term loan with a private lender.

Final Thoughts

Payday loans and instalment loans both have numerous benefits to offer borrowers, and it’s important that you learn about all of the major differences between them before deciding which you want to apply for. The type of loan that you get will be crucial for a number of reasons, so you don’t want to rush into a final decision. Payday loans in particular have become incredibly popular because of how easy they are to get and how quickly approved individuals can get the money they need for important expenses that come up in their lives.