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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. read more


Here’s something nobody expected would happen. After the many criticisms payday lending has received in the last few years from some quarters, and the recent laws and restrictions imposed on the industry, it was expected that payday lending would go down steeply. Almost everybody was expected to stay away from these lenders because they supposedly exploit their customers by charging so called steep interests. In fact, many predicted that the payday lending industry would go out of business soon and even seemed worried about the unemployment this would generate.

But here’s what actually happened. According to a report published by the Department of Business Oversight in California, the numbers of payday loans the seniors are taking in the state have actually tripled over last year. Yes, that is three times more. In other words, payday lending has become more popular in California, in spite of the negative press the industry has received and all the restrictions imposed.

Number of Payday Loans Goes Up From 945,000 to 2.7 Million

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Meet “Dave”, the finance app, which predicts upcoming expenses, and issues alerts to customers when their balance is at risk. Powered by high-end artificial intelligence, Dave is saving hundreds of consumers from expensive overdraft fees and is issuing warnings about the high costs charged by the banks.

Co-founder of this Los Angeles, California-based business, Jason Wilk says the ultimate objective of Dave is to help consumers avoid bank overdrafts because it is one of the most “expensive forms of credit”. Wilk describes Dave as the “weather forecast for money management”.

Not just that, Dave is even promoting payday loans, saying that it is cheaper than bank overdrafts and more customer-friendly.

There is a lot of evidence that shows payday lending is one of the best forms of credit. Let us take a few cases and analyze them to understand why.

Case #1 – Overdraft Fees and How the Banks Abuse Their Consumers

Let’s take an example to understand this better. Assume that a person is a little short of cash and needs only $200 for say making utility payments. No conventional lending agency will offer a loan for such a small amount. So the person has to write checks for the bills, knowing that there is no money in the bank to cover the payment. This is when the bank will charge its overdraft fees. read more


Payday loans are small dollar loans where money is provided to the applicant for a short period of time till the day the next paycheck arrives. The money involved here is usually between $300 and $1500 and it is for a couple of weeks. This is why payday loans are also referred to as short-term loans or cash advance loans – there are many names for it. These loans won’t solve your long-term financial situation, but are great to solve temporary financial emergencies.

There are many other advantages of payday loans, apart from obviously helping people solve their immediate financial emergencies by providing money when they need it. For instance, these loans are very convenient, faster than other loans, and the eligibility checks are not as rigorous as regular conventional loans. This is why payday lending has become so popular in the United States and in many other parts of the world.

Most people refer to them as a payday loan, which is the general term for these lending schemes, but did you know that there are quite a few types of payday loans? There are many similarities between them, but there are a few differences as well. Let us investigate in more detail. read more


The economy is not perfect. We all earn money, some of us more than others, but the cash is often not adequate. Rich or poor, we often can do with some more cash. Sometimes the extra money is for buying things we want, but may not be essential to our existence, such as the latest television set or the latest gadget, or for going on a long cherished vacation, but at other times, the extra cash is for more immediate and urgent needs, like for instance, buying medicines, paying off utility bills, or making urgent car repairs. Of course, for purchases like a car or a home, we need a lot of extra cash.

A loan can give us the cash we need. There is no stigma attached to a loan anymore, as thousands of people the world over take a loan for various reasons. In fact, taking a loan is now a fairly common and accepted practice.

Both individuals and businesses need loans. While individuals need the extra cash for personal reasons, businesses need the money for buying tools, setting up plants, making expansions, paying wages, buying raw materials or supplies, for operating expenses and for a variety of other reasons. read more


Short-term debt, such as a payday loan is better in many ways. What is a payday or a cash advance loan? If you are a little short of cash or in an emergency and need funds to see you till the month end, you can approach a payday lender for this money. The money is directly credited to your bank account, usually within 24-48 hours.

You have to repay once you receive your next pay check. It’s a great help when you need to make urgent car repairs, pay utilities, or make some other urgent payments. These cash advances are typically for short terms, for 2 to 3 weeks, and the amount is usually between $300 and $1500. The payday lender won’t ask you why you need the money.

The Future Is Uncertain

Most of us can do with some extra money. That is why so many people take loans for a variety of reasons. Taking a loan is always a big decision because when you do, you are making a commitment of paying off the debt, plus the fee and interest, within time. The term of the loan is as important as how much money you have taken as the loan. read more


A payday loan gives you money quickly. It’s a great help in an emergency, when you are short of cash but have to cover for an unexpected situation. The cash advance is usually for a small amount (between $300 and $2000) and it’s for a maximum of a few weeks (till your next payday). However, in spite of this, some people have problems in repaying their payday loan, just as is the case with any other type of loan.

There can be additional fees when you default and legal consequences as well. Knowing how best to pay off the payday loan is thus going to help you immensely.

Understanding the Payday Loan

  • What you can expect – Payday loans are among the most convenient ways of borrowing money. Yes, there is a charge, but it is less than what you have to pay as the overdraft fee to the bank for overdrawing money from your checking account. But, a late fee will be applied if you cannot repay on time, and there will also be rollover rates if the loan term has to be extended. The total amount due as interest can shoot up if you keep the loan repaid for a long time, making it even more difficult for you to pay back.
  • Read the fine print – There are some lenders who renew or extend the unpaid loan with a borrower’s consent. It is included in the terms when you take the loan. So read the terms and conditions carefully before you sign any document.

Paying Back the Loan

Do not hesitate to ask the lender if you have any question about the policy. Get all the clarifications you need right at the start so that there is no confusion about when and how to pay back the loan.

  • You need to know whether the loan will renew automatically. There are loans that renew automatically and set a new payment date, unless you tell the lender specifically to end your loan.
  • Understand the privacy policies of your lender. Ensure that your personal information is always protected.
  • Learn about the additional fees before taking the loan. There are lenders who will charge fees for depositing the amount to your bank electronically.
  • Find out how best to contact the lender. There are payday lenders who are entirely online. Also, ask about the response time.
  • If you authorized the lender to deduct the amount due directly from your bank account, you should know the precise amount that will be withdrawn, and the date when this withdrawal will happen.

Create a Budget

Create a responsible budget within your income. This will give you more fiscal control and help you pay back the loan on time. You can avoid the late fees and interest rates. read more


Payday loans are small-dollar loans, usually between a few hundred dollars and $1000. The cash advance is made for a couple of weeks till the next payday. Since the amount and the term is less, a high majority of people have no problems in repaying the loan amount and also the fees involved and interest. But there will always be a few people who face problems in their repayments, just like any other type of loan.

There will obviously be consequences of not paying back any loan, not just a payday loan. After all, when you are taking credit, you are making a commitment of paying it back. It is important for the lender’s business that you pay it back. It is also important for the other debtors because if the lending business doesn’t have the funds, how will it offer cash to people who need a loan?

But what can be the consequences of not paying back a payday loan? Let us investigate.

1. First, admit the credit consequences:

Your credit score is likely to take a hit when you default on the loan, and don’t work out an alternative payment plan with your lender. If you default, the lending agency may sell this debt to a collection agency legally, though this may not happen always. The default may also be reported to the three most important credit bureaus. read more


An emergency doesn’t come with a warning. It can happen anytime, and in fact, often tend to happen when you least expect them. Take for instance the weekend!

Almost everything is closed during the weekend – the banks, all conventional lending institutions. So what do you do if you suddenly need some money, and cannot afford to wait till Monday to apply? Even then, it is likely to take a few days before you will actually get that cash. If you are lucky, you will get it by the end of the next week. So do you approach your friends, family, or worse, your colleagues? This is surely embarrassing. Is there a way to avoid this?

A payday loan can be the right solution. There are many payday lending agencies across the United States that will offer you a quick-cash loan even during the weekend. The application and approval process is very easy and quick. You can apply online from the privacy of your home. No one has to know that you are a little short of cash. All you have to do is just submit some basic information. The processing and approval can happen within just a day. So you will have the money within just 24 hours. That is the fastest way you can get credit in the United States. read more


Many people are self-employed now, and the number is increasing every day. A lot of them are in traditional work, such as doctors, and lawyers. But there is also a new generation of self-employed people like accountants, software professionals and writers, for instance. So what happens to a self-employed person if he needs a loan, particularly if the person has poor credit?

Traditionally, payday loans have been denied to such people because they do not have a stable source of income. The up and down cash flow was deemed as too uncertain. But that is changing. Many lenders are realizing that, just like others, self-employed people too need a cash advance, and they too cannot afford the time traditional lenders will take to process and approve the loan. In an emergency, a payday loan remains the only practical option for the self-employed people.

Plus, banks have been traditionally unwilling to offer a loan to self-employed people, particularly if the person is in the first year of going independent. Many banks may regard working for yourself as a risk, even if you are making decent money, and are thus unwilling to offer a loan to self-employed people. To them, being self-employed is like being just a step away from becoming unemployed. read more