Installment vs Payday Loans: What's the Difference?
Learn about the differences between installment loans and payday loans in just two minutes or less. Check out the full blog post below to learn more about the different types of loans –– so you can figure out which is best for you.
Let’s start with installment loans. We’ll use these grapes to represent the money you want borrow. Say it’s $2000. When you get an installment loan, your lender gives you the cash as a lump sum and you pay it back, a little bit at a time, over many months. Your APR or Annual Percentage Rate is how much it costs to borrow that money, taking into account both your interest rate and any fees. If you have good credit, you’ll pay a smaller APR - maybe just one dollar – or grape – for every 10 you borrow. Although, if your credit’s not great, you could pay a lot more.
Payday loans are different. With payday loans, you’re borrowing less and paying it back a lot sooner. Usually in 30 days or less. Payday lenders don’t usually check credit scores – which is why they’re an option for those with poor or no credit. But payday loans can have interest rates of 400% or more.
That’s why some states regulate payday loans. And some outlaw them altogether. Check out full blog post to learn more about the different types of loans –– so you can figure out which is best for you.
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