How are pay day loan different from installment loans?

Loans are a great way to buy things and fulfill dreams that may take years to fulfill otherwise.  The number of options available in the market for different types of loans sometimes creates confusion for people in choosing the right one for them.

What is payday loan?

Payday loans are a one-time loan that is given to borrowers with the condition that they will pay it back on the next pay day. They are usually high-interest rate loan amounts that are given even in cash. The borrowers generally do not have to go through a lot of paperwork to get this loan approved. The ease of payment and sanction is the reason why many opt for this loan type. The risks involved with the payday loan is that in case of non-payment the repayment amount is increased and the burden is highly amplified. It is best for small loan amounts where the borrower is in a position to pay it back on the required day.

installment loans

What are installment loans?

The explains that the loans that are given to a borrower generally under some guarantee to be repaid in installments. The amount of loan is received in lump sum and the return is made in equal installments. The interest is also a part of the equal repayment installments and the same is spread over different months.The states that it is a great way to spread the liability over many months that makes it easy to pay them. The borrower gets in a position to plan to make these repayments in time.

The borrower must access both these options in case of loan needs. The borrower must be clear about the differences so that they can get an understanding. The choice making becomes easy in this case.

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