Many credit products are marketed every day for consumers who need short and immediate forms of credit. The problem is some borrowers may be unclear about the differences of each. Two forms of credit that are usually confused are installment loans and advance payday loans. It is important for the customer to know what options they have and the difference between each line of credit because they are both very different and come with their own terms, repayment conditions and loan amounts.
It is important to note the payday loan industry is one of the most popular alternative credit options available. A payday advance loans allows for a high acceptance rate per individual and they are available nearly any time of the day due to their online convenience. Payday advance loans provide consumers with small-denomination loans for short periods of time - usually between paychecks. Advance payday loans were developed in the early 90's in response to a lack of availability for short consumer credit alternatives. Customers were tired of bank overdraft fees and late penalties. A payday advance loan eliminates these extensive fees and only charges you a fee based on the amount of the loan.
One misconception of a payday advance loan is it is the same as an installment loan. This is usually because both advance payday loans and installment loans fall into the category of an unsecured loan type and loan amounts are relatively small. In reality, the two types of loans are very different, primarily in relation to the payback process of the loan and credit approval.
Payday advance loans are small loans of between $100 and $1,500, usually taken out for emergency financial situations. The full amount must be repaid in a matter of a couple of weeks (by the next payday). In contrast, installment loans can have a larger line of credit available to the customer. And when comparing cash advance payday loans repayment terms to the installment loan terms of repayment, installment loans get their name from their repayment method. Repayment is made by the customer in small installments to lenders over a period of time.
Finally, the type of loan varies by the urgency of the consumer. An advance payday loan approval process takes no more than an hour and the loan will be transferred to the account, usually within one day. With installment loans, since credit is taken into consideration, will take longer to process and approve. The consumer may have to wait weeks for lender approval.
If the customer understands the key differences between the two popular loans commonly misconstrued as the same, the individual can take the loan the best fits their situation.