Considering a Payday Loan?
If you are considering a short term payday loan you may be confused as to where to begin. You have the option of applying for a short term payday loan or an installment loan. Knowing the difference between these different kinds of loans can help you make a better decision as to which one is the best option for you. Short term loan rates can vary depending on where you obtain your loan so it is important to understand the difference between the different types of loan that are out there for you to choose from.
Payday Loan Rates
Payday loans and installment loans are quite a lot alike but do have some differences. The interest rates that come with these loans are very similar. If you are looking for a payday loan, you can obtain one for the lesser of either $850 or 25% of your monthly gross income. A payday loan is borrowed on a short term basis and should be paid within the next month or so. Many times it will come out of your checking account automatically on your payday. These loans are paid back with a check that is post-dated and have a very high annual percentage rate. If you are not able to pay back this debt right away it sometimes can roll over until the next payday.
Installment Loan Rates
Installment loans are typically used for individuals as well as small business owners. You can borrow thousands of dollars more than you can with a standard payday loan. An automatic payment plan is set up to make sure payments are made on time. The interest rates can vary depending on your credit score. Many companies will let you renew these installment loans in order to keep steady income in your company. Sometimes you will be required to submit some kind of collateral especially if you borrow several thousands of dollars. This is the better option for people with higher incomes or small business owners who have steady revenue coming through.
Conclusion
Payday loan and installment loan rates are typically very similar. Most installment loans require you to allow them to perform a credit check so the rate will be based on that alone. Payday loans are meant for individuals who experience financial hardships but do not require thousands of dollars in cash. Understanding the difference between the two will help you make better decisions in the long run.
