Payday loans are, for the vast majority of people, nothing but troublesome and problematic. A few issues keep coming up with payday loan providers, and the original intention is muddled. Payday loans are only really relevant for people who need instant cash now with the ability to pay the entire balance back within a few weeks.
Now, this leaves only a small subgroup of individuals, such as those about to see a big windfall but must have cash right before it falls. Everyone else was caught in a vacuum they had a hard time escaping. Thankfully, a few alternatives have popped up that offer more favorable terms and a smarter system of payment. One of the better options is an installment loan.
What’s the Difference?
The key difference between a payday loan and an installment loan is rather huge. The difference dramatically reshapes the landscape of installment loans over payday loans. Payday loans earned their name because of their payment structure- on payday. It is a single-time payment, to be paid in full. Without this payment, mounting fees and penalties are applied.
Installment loans are paid in installments. They are separated, minimizing the effect of that initial big payment that payday borrowers always fear.
There are some similarities in the construction between payday loans and installment loans, and borrowers should be aware of them. These similarities can still be troubling if any payment is missed, such as lofty fees to encourage timely payment.
Is There Still Interest?
Payday loans are not entirely unlike payday loans in structure. Like virtually any loan, there is interest to be paid. The interest is modest and varies on the length of the loan terms and the total. But, it is still something to account for. Blue Trust Loans offer details on interest rates and APR on the website.
Payday loans and installment loans are still only for a small group of people. They are not advised for anyone who realistically has the ability to wait a few weeks or months. But, for a select group of people who can realistically manage installment payments for the near future but need access now, installment loans can potentially be helpful.