What is the difference between payday loan and installment loan?

Payday Loans

Are you planning to borrow money off the bank? In this case, you have two main offers at your disposal – payday loans and installment loans. What is the difference between them and what is worth choosing? An explanation over at snesheaven.org

Non-bank loans are an attractive alternative to bank offers. First of all, they are distinguished by easy accessibility, because we can receive them without the need to provide a number of documents confirming income, as well as without leaving home – we will do everything online.

Payday loans and installment loans offered by non-bank companies are a good choice when we cannot get a loan from a bank or when we want comfort. However, before we decide to borrow money, we should analyze whether a payday loan or installment loan will be better for us.

A payday loan – low amount and monthly repayment

When we need money now and it is a smaller amount, in this case, the best choice will be the payday. These types of loans allow us to instantly repair our home budget when we do not have enough savings in the face of unexpected expenses.

Usually, payday loans are granted for an amount of up to USD 4,000, but it is worth pointing out that as a new customer the limit for us may be lower, for example, USD 1,000 or USD 2,000. It depends on the loan company policy. The loan repayment period is usually 1 month. In some companies we can extend this period, but for a fee. Therefore, the loan amount should be tailored to our financial capabilities.

Installment loan – a solution for larger expenses

Non-bank installment loans are an offer addressed to people who want to borrow a larger amount, for example up to PLN 10,000. We can also take these loans for a longer period. Usually, it is up to 2 years, which gives 24 monthly installments. Thanks to this, a person taking out a non-bank loan in installments does not have to pay back the entire sum at once and can do it in smaller, more convenient installments for the household budget.

As in the case of payday loans, we can also spend on installments for any purpose. Due to the larger quota limit, they are most often chosen when more expenditure is being prepared, for example, renovation, travel, treatment or shopping. The advantage is also the possibility of spreading the expenditure into installments – then we reduce the risk of problems with paying the debt because the installment amount can be adjusted to our financial capabilities.

In terms of availability, the installment loan is offered on a similar basis to the temporary loan. In the loan application, enter your income and expenses, which are the basis for performing the creditworthiness analysis. Also, the loan company most often checks clients in the database of debtors, for example in the BIK database. We can have both an installment loan and payday loan on the same day or within a few days on our account.