Payday Loans vs Installment Loans:

According to CNBC...

many Americans are one emergency away from an unplanned financial crisis. A recent survey indicates that around 60% of American households couldn’t cover an unexpected $1,000 expense without having to borrow money. If you are one of those Americans, you are definitely not alone. But when it comes to crunch time, it can be stressful to figure out what type of financial solution is right for you.

There are many types of personal loans available to consumers, each of which comes with its own set of repayment terms, finance charges, fees and other terms.

Payday loans have long been a go-to for those who need immediate cash to handle an emergency. This is especially true for people without access to credit cards or without access to other means of credit. So, what is the difference between a payday loan and an installment loan? Which one is your best option when faced with a financial emergency? Let’s explore the two…

Payday Loans

Payday Loans are small, short term credit solutions, usually between $50.00 - $300.00. Because the terms are so short (usually until your next payday), you are expected to pay back the entire loan at one time instead of making monthly payments. Payday Loans are convenient, easier to get and don’t typically require a lengthy credit check and application process, which is one reason they are so popular. Payday Loans usually don’t require the pledge of assets as collateral.

While the needs of each borrower are unique, Payday Loans may be best for borrowers that:

  • Need simple, quick extra cash between paychecks
  • Need to promptly take care of emergency expenses
  • Have limited access to bank products
  • Need small loans with quick turnaround
  • Have a marginal credit score or limited credit history

Installment Loans

Installment Loans are generally larger loans with longer payment terms usually made in equal installments, hence the name Installment Loan. The terms of installment loans are typically over several months to several years. The borrower receives a lump sum and agrees to pay a fixed monthly payment over the length of the loan. Installment Loans can range from a small unsecured loan to a large mortgage for your house. These loans usually require a credit check and good credit standing. For a person with a marginal credit score, these loans may require a co-signer. The interest rate charged can depend on many factors including your credit score and the value of collateral that is pledged. An Installment Loan is easier to refinance so the borrower can either obtain additional money or extend the maturity of the loan.

Although there is no “typical” borrower for installment loans, these borrowers usually:

  • Have a better credit score and an established credit history
  • Look to pay off the loan over time to lessen the impact on their monthly household budget
  • Look to refinance to obtain additional cash before the loan matures

With three locations in Northeast Louisiana, Albany Finance is your trusted lender for fast, secure and confidential loans. See your options today by applying for a loan on-line or visiting one of our convenient branch locations. Regardless of which type of loan you choose, Albany Finance appreciates the opportunity to serve its customers and encourages all customers to use credit wisely.