There are a few similarities between payday loans and installment loans. For example, they are both small dollar loans where the lending business will give you a cash advance for just a few hundred dollars, unlike the banks and other conventional lending institutions, which generally are not keen on such a small amount. Secondly, both these types of loans and processed and approved quickly, and is thus of great help to those who need the money urgently because they are in an emergency.
However, make no mistake about this. There are lots of differences between payday loans and installment loans. They may seem to be the same because of a few similarities, and that is why many people often get confused. But the two are not the same.
Let us try to find out what makes the two different.
What Is a Payday Loan?
A payday loan is a short-term cash advance that is issued till the next payday. It is usually for a couple of weeks. The money advanced is between $200 and $1000 in most cases. The application process is easy. Processing and approval is quick. The money is credited directly into your bank account. On payday, the full amount plus interest and fees is debited from your account. Most of the payday lending businesses is located around the big cities. In recent years, many of these businesses are working online.