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Payday Loans and Instalment Loans Explained
When researching loans, it can be a little bit confusing with all the different types of loans which are available from payday loans, short-term loans, instalment loans. These terms are used almost interchangeably but is there any real difference between the various types of loans.
All these types of loans provide cash fast when you really need it, but which type of loan you should apply for will depend on the circumstances and your current situation.
Although they are both useful sources of finance, payday loans and instalment loans serve different purposes. Depending on your situation, one could be perfect for you, the other not so. So, to help you decide, here’s the key differences between payday loans and instalment loans.
A payday loan is a loan for a small amount of money you need quickly to sort out a financial emergency. Payday loans named after the fact that these loans are generally expected to be paid back within a short space of time normally when you are next paid or within 30 days of having taken out the loan.
Sometimes a payday loan can be paid back over a number of months if that is what you agree with the lender. Payday loans are useful if you have just received an unexpected bill or fine and you just don’t have the money in the bank to pay it until next payday. Main culprits are car repairs and boiler breakdowns.
Unlike a payday loan, an Instalment loan is repaid over the course of many months. When you apply for the instalment loan the lender will set out how much you have to repay each month and over how many months is something you have to determine with the lender. You will want to ensure that you have the funds available in your bank to cover the repayments. Instalment loans can be taken out from between 3 months to 60 months
Just like an Instalment loan a short-term loan is one that is normally repaid between 3 and 12 months. Short term loans are for amounts between £200 and £2500. Your lender will perform a credit check to ensure that you are able to afford the repayments each month.
Which loan is right for me?
The choice between payday loans, instalment loans and short-term loans will depend on what your circumstances are and what you need the money for:
Apply for a payday loan if:
Apply for an instalment loan or short-term loan if:
Before you take out any finance you must ensure that you have the ability to repay the loan in full if it is a payday loan or the monthly instalments if it is a instalment loan or short-term loan.
Any responsible lender will only lend if they believe you can repay without getting yourself into financial difficulty. All responsible lenders will perform affordability checks and identity check and will only lend to you if they are sure you can pay it back.
All reputable lenders are authorised by the Financial Conduct Authority
Many people in the U.K struggle with debts and many do not know how to start to repay them speaking to a debt advisor is one of the best things you will do along with taking action yourself by speaking directly with your creditors.
You should always seek professional advice when handling debt problems. Cashute are not licensed debt advisers and any information contained in this article should not be taken as legal advice. It is your Responsibility to seek out correct legal advice