Payday loans and installment loans are different. People take out these loans for a variety of reasons. These types of loans are widely criticized for being “small dollar, high cost” loans. In most cases, customers who use these loans have a low income or a poor credit score. Consumer advocate groups are working hard to make payday loans illegal in all 50 states. Consumers looking for a short term loan should know that there are other borrowing options to consider.
These short-term loans are usually up to $500 and due in a short amount of time; in most cases 30 days. They are designed to give the borrower a bit of a cushion between paychecks.
Payday loans are attractive because you need only to have a job and a checking account to qualify. There are no credit or FICO score qualifications. When you apply for a payday loan, a lender will assess your financial situation to determine how much they will lend you. Once you sign on the dotted line, be prepared to have the lender debit the money out that you owe upon the payday loan’s maturation date.
One of the main reasons why payday loans are not a good idea is because of their short repayment window. Most payday loans must be repaid within two weeks or upon the borrower’s next pay date, hence the name “payday loan.” Most lenders will collect their payment directly from a borrower’s checking account, and if the account doesn’t have enough funds to cover the cost, the borrower could accumulate non-sufficient fund fees.
One alternative to taking out payday loans is getting a check advance to help alleviate the pressure. You can get a check advance online and it can be a safer and hassle-free alternative to payday loans.
Check Advance Installment Loans
A check advance is a type of installment loan. These loans can range from $150 up to a few thousand dollars. Some view these as a better payday loan alternative. The loan is to be paid back in installments that range from six months to two years. Finance charges, principle and interest is factored into the cost of each installment payment.
These loans can be useful for individuals who are money-strapped or who have poor credit because typically these types of loans require only proof of income for approval. This makes check advance loans more accessible than other loans that require a basic credit score for approval. Unlike payday loans that require you to pay everything back within a few days, installment loans give you a chance to spread out your payments over a longer period of time. This is a more flexible solution, since repayment disrupts less of a borrower’s cashflow.
If you are in need on a loan and cannot decide on what type of short-term loan to borrow, do your research and make note of the pros and cons of the different loan types available to you.