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Yes, you read that RIGHT!
No. A Payday Loan Is Not an Installment Loan
Payday loans are short term and unsecured loans that are supposed to be repaid within your next payday. However, such loans can also be rolled over to some other due date, but the repayment shall be in full. And, installment loans are short term loans (can be secured or even unsecured) but, the amount can be repaid into small installments over a certain period of time. Therefore, cash advance loans are not installment loans. Payday loans are comparatively costlier than that of the installment loans. You do not tend to feel the burden of paying back the latter, as these are being paid into equal and small monthly installments.
If not paid back on time, both of these credits can hurt your credit score. But such loans do not build up your credit score on timely repayments.
Which one is better?
There is a long list of situations and needs that you will have to consider before you finally go and opt for a credit. Let us know some of the most important factors that may affect your choice!
- If the amount of money required is higher then, you should always go for an installment loan; so that you can repay the entire sum into small monthly installments as per your convenience.
- If you have bad credit or no credit score; always go for a payday loan. You may face difficulty in availing installment loans with bad credit.
- Payday loans are the costliest option of credit. The APR is about 400%, whereas an installment loan is much lesser than this depending on the duration of credit.