You do everything to manage your finances and make ends meet. You stick to a well-crafted budget and live within your means. Unfortunately, even the best financial planners may find themselves in need of an emergency loan once in a while.
If you find yourself in a financial bind, you might be wondering about your loan options. Two that stand out are payday loans and installment loans. Which one is best for your financial needs, though?
Read on to learn everything you need to know about a payday loan vs installment loan.
A payday loan is a small loan that is meant to help you bridge the gap from one payday to another. The amount for which you qualify depends on the amount of money you bring home each pay period, but they are usually less than $1000.
Each payday loan is due on your next payday, and they can come with a hefty interest rate — up to 400% APR. Most lenders allow you to take out the loan again if you pay the fee. Regardless, it’s better to pay them off as soon as possible to avoid losing money on fees.
Payday loans are a solid option for those with poor credit because lenders do not perform a credit check. You just need to bring a paystub and checking account information.
Installment loans are a more traditional form of loan. They are issued based on your income level and your creditworthiness.
Included in this category are personal loans, car loans, and mortgages. You get all of the money upfront and then pay it off in even amounts over a specified period of time. Interest on installment loans is significantly lower than that of payday loans.
Payday Loan vs Installment Loan: Which Is Right for You?
Making the decision between payday loans and installment loans may seem daunting, but if you sit down and crunch the numbers, then it should become evident which one is best for you.
For example, if just need a couple of hundred dollars to make it to your next payday, then a payday loan is a good option. If your unexpected expense is significant, however, you’ll need to pursue a traditional installment loan instead.
If you’re looking for a little of both, there are a few payday installment loans online. This is a good option for those who need more than the average payday loan can give, but significantly less than an ordinary installment loan. It’s also good for those whose credit is less than perfect, but who still need to make ends meet.
There’s a Loan for All Financial Needs
You have a lot of things to consider when choosing between a payday loan vs installment loan. Payday loans and installment loans are helpful for a wide variety of financial needs. Be sure to take the time to weigh the pros and cons of both before making a decision.
Are you interested in finding out more about managing your finances? You’re in the right place! Check out the rest of our blog for helpful information about a wide variety of topics!