Are Instalment Loans Better than Payday Loans?

There are different types of short-term loans and two of these are instalment loans and payday loans. These are probably some of the most well known and well used short term loans and it is worth therefore understanding the main similarities and differences between them so that you can decide which will be the best for you. Deciding which is better, will depend on what you need from them.

Similarities between payday and instalments loans

These loans are both short-term loans which means that they are repaid relatively quickly compared with more traditional loans. They are also usually arranged very quickly. This type of loan came about to help people in emergencies and therefore they are arranged vey quickly. The longest time is normally a few days, but there are lots of lenders who can get the money into the bank account of the borrower within a few hours.

They also tend to have the same criteria when choosing borrowers. Unlike traditional lenders they will not look at the credit record and use it to judge the risk they are taking on. Many lenders do this and will refuse to lend to people that they fell will not be able to repay. They will judge based on their, previous record for repaying loans and whether they can show that they are capable of making regular repayments. With a short-term lender, they will not judge in this way. These lenders came about to help those with a poor credit record and therefore they expect that they will have had problems showing they are capable of repaying.

They will both have some requirements for borrowers though but these are very few. They will require that borrowers have a bank account as that is where they will put the money that has been borrowed and they will set up a direct debit for repayments there too. They will also need to see evidence of regular payments going into the account. This can be a salary but it could also be benefits, pensions or any other sort of income. This is because they set up the repayment to go out on the day that you are paid so that you have the most money available to give you the best chance of being able to repay.

Differences between them

There is quite a significant difference between the two types of loans. A payday loan is repaid in a lump sum on the next day that you are paid. This means that the loan lasts a very short amount of time as it will be a maximum of weeks and possibly even days before you have to repay it. This can be extremely useful for anyone that does not like being in debt for long. However, there is a problem if the person does not have enough money to repaying it one lump sum. Even if they do, it could be a problem because they might need to use that money for other things, such as bills that come in during the month. Therefore, an instalment loan could be better. This will allow them to repay the loan over a series on months. This makes the repayments more manageable. However, as the money is owed for longer, it will mean that there will be interest charged on the loan. It will be up to the borrower to decide whether they feel that it is worth paying this extra money but as a result they will find that it is easier to repay, there is less chance they will miss a repayment and get extra charges and they will be able to more easily afford their other bills.

Which is best?

To work out which is the best it is important to find out some information. Firstly, find out when you are expected to repay, when and how much. Then you can look at your household finances and work out what you will be able to afford. It is worth making sure that you check whether this is a typical month as well or whether there are likely to be extra expenses. Think about birthdays, yearly bills like MOT, quarterly bills like water rates and things like that which could make it more difficult to manage.

It should not take too much work to calculate how much you could afford to repay and this should allow you to work out which will be the best type of loan. If you can be confident that you will be able to afford a one off repayment and cover all of your other bills, then a payday loan could be better because it is likely to be cheaper for you. However, if you are not sure whether you will be able to do it or  you know that it will just be too expensive, then the instalment loan will be the better choice.

Do make sure, once you have decided which loan to go for that you compare different lenders. Then you will be able to be sure that you are picking the lender that will give you the best value for money.

How Quick are Cash Loans?

If you need money really quickly then it can be easy to get into a panic. You might just grab onto the first opportunity you see and hope that it will work for you. It might be that you hope cash loans will help and that they will be quick enough. While this might be the case, it is well worth finding out more about each of your options before you go for one. If you feel rushed though, you may not feel up to doing the research. It could be worth asking a friend or family member to help you so that you can work through it together and find the best solution.

It is best to start by listing all of your options and then finding out more about each of them. If you are considering cash loans, for example, make sure that you are aware of how they work so that you know if they will be the right option for you.

What are cash loans?

A cash loan is a payday loan. This means that it is offered by untraditional lenders and is often available online or to apply for by telephone. It will offer a smaller amount of money than many conventional loans, such as a few hundred pounds, perhaps up to a thousand. Lenders do not need a good credit record either, so if they cannot borrow elsewhere, they may still be accepted. The borrower will apply and will quickly be assessed. If they fulfil the criteria for a loan, they will have the money paid directly into their bank account. They will need to repay it when they next get paid.

How do cash loans work?

Cash loans work a little differently to a traditional loan. This is because the whole amount borrowed is normally repaid in a lump sum. This payment tends to be set up by direct debit to leave the borrowers bank account on the day that they are paid. This means that they are highly likely to have the money available in the account to pay it. They will then be repaid in full within a few weeks or even a few days of being taken out. This means that they do not hang around for very long.

How quick are cash loans?

When short-term loans, such as cash loans first came about, they were designed to help people in emergencies. This means that they were always set up so that they could be organised really quickly. This means that there are now some lenders that will offer cash loans that will let you have the money in your bank account within a few hours. This will depend on the lender though and you will need to check. If you need the money really quickly, then it is wise to check whether the lender of your choice will be able to provide that service for you.

Are cash loans the best option for me?

Therefore, you could find that a cash loan will be a good option for you. However, it will very much depend what it is that you are looking for in a loan. If you need money quickly, then, as long as you choose the right lender, you could find that it will be ideal for you. However, like you should with all borrowing, you do need to check your other options.

It is firstly a really good idea to compare lots of lenders. You will then be able to see how much they charge and what they can provide for that money. Make sure that you are getting good value for money. You may need to pay extra in order to get the money more quickly and you may decide tat it is well worth it. However, you may feel that you would rather wait a little longer and pay a bit less. There may be other factors and features that you may find important as well, so have a think about what expectations you have.

You should also compare this cash loan option with other options. For example, think about whether you really need the money at all. Consider whether you can earn the money, whether you have enough savings to pay for it, whether you could sell something to make the money or whether you can borrow the money using a different type of loan. There could be all sorts of alternative options and it is good to brain storm a few ideas. This is a lot to consider, but it is a good idea to think about all of your options and compare each of them. Then you will be able to decide whether you think that you have made the right choice and found the solution that will give you the very best value for money.