Installment Loans Vs Payday Loans
Many times when people get into a financial bind they look into acquiring a payday loan as a quick fix. What a lot of people don’t realize is that this can oftentimes create even more of installment loan an issue for themselves than they were ever even in to begin with. You must be very careful with taking out a loan and make sure you completely understand all the fine print and obligations or you may get in a situation that can be hard to dig yourself out of.
First off, let’s go into a payday loan and define what exactly this is. One common definition of this would be a loan that is obtained under the agreement that it will be paid off within a term between 14 days and no longer than 31 days. Another popular definition that is commonly used would be a loan where a postdated check is used to secure it. This check is usually dated between 14 and 31 days ahead of the date the loan is obtained. So basically, it must be paid off in a very short amount of time from taking out the loan to begin with.
People from across the country get into serious financial trouble when they acquire a payday loan. Too often, a lump sum payment just isn’t feasible for people in need of a financial help, but they still acquire a payday loan when they should be taking advantage of smaller payments over a longer period of time. Taking up to a year to pay off a loan is much easier than attempting to pay off their loan in the allotted time span of 2 weeks to 31 days like a payday loan normally does.
Most of the time a payday loan is a small amount of money with large interest and fees. It is also an extremely short loan which is required to be paid back in what is mostly seen as an unrealistic amount of time. This can oftentimes cause the person who took out the loan to have to extend the term with the lender which causes even higher interest and additional fees. Many lenders are taking advantage of those who are in desperate situations and willing to do whatever it takes at the time to get some extra cash early.
An installment loan is a loan that is made with or without collateral where the borrower makes consistent payment amounts throughout the term of the loan. The amount borrowed plus costs are divided by a number of equal payments making the payments a fraction of the amount owed but paying the complete amount owed by the last scheduled payment.
An installment loan is a much more realistic and safe type of of loan to take out. It’s safer because of the fact that it is more realistic. Paying the money back over a period of time makes it’s a lot easier than trying to pay it all back at once. If it would be so easy for a person to pay back that amount of money in such a short amount of time, than they probably wouldn’t have needed the Payday loan to begin with.
Scheduling your loan payments over an extended period of time allows you to plan out and prepare for paying off your loan successfully.