Payday loans have a somewhat liberal nature. They provide a lot of benefits to the customer in terms of paperwork. There are other types of loans too that have a different process of functioning and differ from payday loans in many aspects.
One such loan is an installment loan. They are a type of personal loan and require credit checks. The article will focus on the differences and similarities of both and if one type is better than the other or not.
Loan pig acts as a direct lender as well as a broker for providing you the money in times of need. You can get a payday loan at any hour of the day. The process of receiving the amount is also quite easy. You are only required to fill an online application form through your desktop, tablet, or smartphone. The data is secured and none of your belongings are kept. For further information, visit: loanpig.co.uk
Installment loans
Installment loans are a category of personal loans. It can include loans like mortgage car loans. These loans need to get your credit card score checked and are normally provided on a long term basis.
The repayment needs to be done in the form of a fixed amount every month. The duration of the loan can be for months or years depending on your agreement with the bank. A car loan may be paid in around 3 months.
This is a legit personal installment loan. Your credit card will be properly checked and the application process may also be lengthy. The interest rates here are more reasonable as compared to the payday loans.
Payday loans
These are comparatively smaller loans. You can only borrow small amounts of money from the lenders. The loan repayment is done at the time of the next payday loan. The bank account details are provided to the direct lender. As soon as the repayment date arrives, the lender will withdraw the money from your account.
In case you are not able to pay the amount on the day fixed, the direct lender will extend the date of repayment and interest will also be increased. The issue that arises here is that the interest rates go extremely high, that is, around 400% APR on average. The increasing interest rates get you stuck in the payday trap.
Since payday loans do not need a credit card check, they are easy to be obtained. But you should only go for them if you are sure that you can repay them or else you will become bankrupt and get stuck here forever.
What is the best option?
As you have studied about payday loans, so any other form of loan is better than it. Do not get confused by the term ‘short term installment loan’. This refers to payday loan only. You get loads of debt after getting stuck in the vicious circle of payday loans. Consider it only when no other option is left.
Conclusion
See the difference between payday and other loans and then only go for the best option.