What, exactly, is a payday loan? And how does it differ from an installment loan? What are the pros and cons of each? If you’re looking for some quick cash, you’re better off knowing about the different types of loans. This will enable you to make the right decision for your needs, so read on!
Payday Loans
Payday loans are short-term loans. You may qualify for a payday loan without a credit check, although the lender may still evaluate your financial situation by other means. As the name suggests, the lender organizes your payments around your payday schedule. You may have to repay the loan within two paydays, including any applicable fees.
It’s important to keep in mind that payday loans are an expensive way to borrow money. Before you opt for a payday loan, you may want to consider other options. For example, you may ask a family member to loan you money. Family loans are typically repaid with no interest or fees. If you do take out a payday loan, make sure you can afford it. If you’re unable to repay your loan on time, your financial situation may get worse.
Despite what you may have heard, there is no such thing as a guaranteed loan. Most often, lenders will require that you have a regular income, a bank account, and a permanent address. They may look at your recent credit card transactions as a way to gauge your ability to repay.
Moreover, before giving you a payday loan, a lender may require you to fill out a form that would allow the lender to withdraw the payment amounts, including fees, directly from your bank account on the due date of each payment. This is called pre-authorized debit.
In most cases, if your application is successful, the lender will deposit money directly in your bank account or give you cash.
Once again, bear in mind that you may face an increased debt load if you’re unable to make your payments on time. The payday lender may charge additional fees or interest, so that the total amount you owe may continue to grow.
On the plus side, given that payday loans are organized around your payday schedule, you may be more likely to have sufficient funds for each payment. The schedule is predictable, making it less likely that you will forget the payment due date. Depending on your situation, this could be the right way to go for you!
Installment loans have their own nuances, so discover how they may differ or align with payday loans below. Always make sure that you weigh your pros and cons carefully and do what’s right for you.
Installment Loans
In contrast, installment loans are typically repaid over a longer period of time and are less costly than a payday loan. They give you more room and flexibility – not to mention time – to repay the loan. Rather than paying off the full amount within two paydays or so, you may have multiple months. You must pay back the full amount, including any interest or fees.
Similarly to payday loans, lenders will require that you have a regular income, a bank account, and a permanent address.
Here at Crediteck, we don’t do credit checks as part of the application process! Once you apply, we will instantly connect you with a lender based on your application. This is one great reason to choose us. Dependent on your application, you may be connected with a lender who requires credit checks.
Here’s another added benefit of installment loans. Due to the fact that you repay the loan in installments rather than as a single lump-sum payment, you may have an easier time making the payments and staying on track.
The lenders in our network offer loans that range from $500-$5,000 with terms typically from 4 months to 24 months or longer. If you have bad credit and an urgent need for cash, Crediteck could be an excellent option! Traditional lenders like the big banks will take a close look at your credit history, so your chances of getting approved for a loan may be lower with such an institution. That’s one further benefit of choosing Crediteck.
There are generally two types of personal loans, secured and unsecured. Secured loans involve assets used as collateral, such as a car. The lenders we work with offer unsecured loans, so there is no risk of losing your collateral due to non-payment or missed payments.
The interest rate on an installment loan may depend on several factors, such as your credit history and the type of loan you’re taking out. We don’t do credit checks, so bad credit will not affect your application with us.
As with a payday loan, a lender may ask for your banking information to withdraw the payment amount directly. If you’re worried that your bank account won’t cover your loan payment, often you can give the lenders a call to let them know when you’re next available to make the payment. If this option isn’t available from the lender, you may wish to consider overdraft protection. It covers the amount of a transaction when you don’t have enough money in your bank account. Overdraft protection has its own associated cost, but it will certainly cost you less than defaulting on a loan.
If you wish to check your credit score or credit report for any reason, use Credit Verify! Registration takes only a few minutes, allowing you to access your personal financial information and enjoy added features and benefits. Go to Credit Verify to learn more.
In Summary
Payday loans and installment loans each have their pros and cons. Installment loans may give you more flexibility in making your payments and could be an excellent option if you ever run out of cash. Payday loans carry their own risks. It’s important to be informed and make the right decision for your financial needs. If you’re ever in need of quick cash, consider Crediteck! We do not perform credit checks as part of our application process, so even a low credit score may not stop you from finding a lender via Crediteck. It may be easier to get approved for a loan with an online lender than a traditional bank. This is why online lending could be your preferred option, whether you’re opting for a payday loan or an installment loan.
In conclusion, the type of loan you seek will depend on your unique needs. Apply with us today, and you might finally ease your financial woes. Crediteck is always here to help! Our financial expertise is second to none, and we work with responsible and reputable lenders across Canada, so you can get cash as soon as the next day.
