Direct Installment Loans Are Not The Same As Payday Loans
If you’ve spent time online recently looking for a loan you’ve come across many types of personal loans. Many of us know all about payday loans and how they work but only recently have installment loans burst onto the scene. Installment loan lenders and payday lenders are the same as provide small to mid dollar loans with higher than average interest rates. Beyond that though, the structure of payday loans and installment loans online are very different.
Do you want to know what it takes to find the top direct installment loan lenders in a short amount of time? Read our latest article to find out more!
There are three main components of a direct payday loan. First of all, payday loans are generally offered for very short terms. For example a direct payday loan in California usually has a payoff term of anywhere from 14-21 days. Each state has different requirements but they’re usually going to need a loan payoff within a few weeks or a month. Payday loans are granted for a lower dollar amount compared to installment loans. Some states will allow a max of $255 while other states may go up to $1,000. Payday loans will always have a higher interest rate compared to installment loans online. Some payday lenders will charge interest rates that are well over 200% for a simple direct payday loan. The direct payday loan industry charges high interest rates and this stigma makes installment loans look much better in comparison.
Installment loans are setup as one specific amount due. This amount due is set over a certain period of time into monthly payments. Once you make all your monthly payments per your loan terms you will no longer owe any money to the lender. For example, let’s say Betty took out a direct installment loan for $5,000. T pay off her loan in full she’s going to be paying a set amount of money each month. This monthly payment includes the loan principal amount and interest charges. There’s also the issues of advanced fee lending. You can read all about the high interest rates and advanced fee scams by going to this FTC page Unlike payday loans, installment loans have lower interest rates and longer payoff terms. Some lenders that fund installment loans online will let you pay off your loan early with no prepayment penalty. One other difference to point out is that installment loans are usually more complicated than a direct payday loan. Since you’re borrowing more money then a traditional direct payday loan you’ll need to deal with more payments and requirements. There are many different factors that go into choosing the best type of financing for your needs. Start with a database that compares direct lender installment loans and go from there. Many well rated financial companies will provide this new type of financing. It makes sense to spend some time reviewing the best lenders.
Direct Installment Loans Online Aren’t Easy To Get!
Based on the differences we’ve touched on above many consumers would likely choose an installment loan online over a direct payday loan. On paper it’s a no-brainer as you’re going to have more flexibility, lower interest, and more time to pay off the loan. With that, it’s not always that simple. Many consumers are not going to be eligible for any type of installment loans online. Credit requirements are tough with installment loans direct lenders. Most consumers looking for a short-term loan will have no chance of qualifying. That brings us back to square one. Payday loans get a bad rap but they serve a purpose. Many consumers who are rejected for direct installment loans online would have no where else to go without the payday loan option. If you find yourself in this situation make sure you need the loan and that you pay it back in full by the due date. This way you’re keeping your interest charges down and not getting stuck in the payday loan cycle. Direct installment loans online are the way to go if you’re looking to borrow a good amount of money while at the same time have good to decent credit.
Still interested in the installment loan process? Check out our latest article about how the process works when it comes to getting installment loans online! How to apply for installment loans online.
We’ve posted an article that details what it takes to qualify for same day installment loans online. Know what you need to qualify for an online installment loandatabase that compares direct lender installment loans