Unexpected expenses can be a budget killer and that’s where Lift Credit can help you. But how do you decide between an online installment loan vs. a payday loan? While these loans are similar, there are some big differences that you need to know about before you make your decision.
What’s the Difference Between an Installment Loan and Payday Loan?
All loans are not created equal and when you’re trying to decide which type of loan to apply for, knowing the facts about each type could help you save time and money. If you’re looking for a quick solution that you will also repay quickly, a payday loan could be the right option. If you’re looking for a loan and want more flexible repayment terms, an online installment loan could be a better fit.
The 411 on Online Installment Loans
When a larger unexpected expense pops up in your life, an installment loan is a great solution because it will allow you to borrow more money with more flexible repayment terms. Here are some of the benefits to installment loans:
Benefits of Installment Loans:
- Set a repayment schedule that fits into your budget
- No early repayment penalty
- Simple application requirements
- Lower APR than most payday loans
- Longer repayment terms
- Great for last-minute expenses
- No credit check with certain personal loans (great for people with bad credit)
- Improve your credit if you have bad credit
- Build your credit if you don’t have any
- More spending freedom than other loans like standard car loans
- Helps you build financial experience
- Some installment loans offer benefits such as declining rates and rewards
Disadvantages of Installment Loans
- Interest rates can still be higher than more conventional loans
- You’ll be locked into a specific interest rate (although Lift Credit offers declining rates), even if lower interest become available elsewhere
- Ease of access can tempt people into jumping into loans unnecessarily
- If your situation changes before the installment loan is paid off, it can be difficult to renegotiate the terms of the loan
The 411 on Online Payday Loans
When you need cash in a hurry, many people turn to online payday loans. These unsecured loans are usually paid back at the next payday, hence the name. If you need money quickly and can repay it quickly, payday loans could be a good option for you. Here are some things to be aware of in regards to how online payday loans work:
Benefits of Payday Loans
- Payday loans usually don’t require a credit check
- Quick approval
Disadvantages of Payday Loans
- Higher APR and fees than other types of loans
- A lot of fine print to navigate
- This fine print can include prepayment penalties
- It may not help you build credit
Online payday loans aren’t a terrible idea, especially if you’re able to pay it off within the original terms of the loan. They are generally easy to get approved and you can get the money quickly. But it’s not without its drawbacks. The interest rate for these loans can be really high. You’ll definitely pay for the convenience.
An online installment loan differs from a payday loan because it’s designed for people who have an immediate need and want to pay it off over a period of time. These loans offer lower interest rates and easier repayment plans that can work with your budget.
Help, I Missed a Payment!
No one wants to miss a loan payment, no matter what type of loan it is. But sometimes it happens and you’ll want to understand how this can affect your loan. Since the terms are shorter on payday loans, missing a payment is a big deal. This can mean paying more fees and possibly having a negative mark on your credit report.
Installment loans are a little more forgiving. Because the terms of the loan are usually longer than payday loans, there is a little more flexibility if you run into a problem making a payment. The best thing you can do, no matter which type of loan you choose, is to stay in contact with your lender.
Online payday loans and online installment loans are designed to help you when you’re in a bind. There are pros and cons to both types of loans and it pays to do your homework. Our friendly customer service agents are ready to help you decide whether an online payday loan or an online installment loan will work best for you.
Want an online installment loan with bad credit? We offer personal loans with no credit check. Apply for an installment loan today!