With so many different kinds of personal loans it can sometimes be difficult to tell them apart. Many of them have small differences in terms, conditions, or the amount of money you can get. It may not be the most fun process in the world, but finding the right personal loan for your specific situation will require you to research these differences thoroughly.
When it comes to getting fast cash, there are a couple of popular loan options that many people turn to: payday loans, and installment loans. But even within each of these categories there are a number of differences.
Read on to learn more about the difference between 3-month payday loans and installment loans, and which one might be right for you!
What Is a 3-Month Payday Loan?
To understand what a three-month payday loan is, you’ll first need to know what a regular payday loan is. If you’ve ever needed some quick cash to make it to your next payday, then you may already be familiar with payday loans.
A payday loan is essentially a very short-term personal loan designed for borrowers who need a bit of extra cash in order to make it to their next payday. They typically only last two weeks, they’re normally for smaller amounts ranging up to a few hundred dollars, and they tend to come with higher interest rates. Because many of the borrowers who use payday loans have subprime, or bad credit scores, the interest rates and terms may not be as favorable as longer-term payday or other short-term loans.
So what is a three-month payday loan? Well, most payday loans require the borrower to repay the amount within two weeks. But there are lenders out there that will allow borrowers to have a longer amount of time to repay the loan. So a three-month payday loan is simply a payday loan that’s repaid within three months instead of the usual two weeks.
How Does This Compare to an Installment Loan?
An installment loan on the other hand, is paid off over a longer period of time, through several monthly installments. You can also usually get a larger amount of money with an installment loan than you can with payday loans. But the biggest difference between payday loans and installment loans is that a payday loan is paid off in one lump sum, and an installment loan allows the customer to make several monthly payments.
If you’re considering a personal loan, and you can’t decide between a three-month payday loan and an installment loan, here are the main differences between them, to help you decide:
Loan Amount: Installment loans typically allow borrowers to take out much more money than a payday loan, whether it’s a regular payday loan or even a three-month payday loan. Installment loans range from several hundred dollars up to several thousand. Payday loans usually only offer a few hundred dollars.
Repayment: The amount of time you have to repay the loan is also a key difference. While three months is a lot longer than a typical payday loan, installment loans can range up to several years depending on the lender and the type of loan.
Interest Rates: In general, installment loans are a much better alternative to payday loans when it comes to the cost of borrowing. Interest rates for payday loans tend to be much higher than that of installment loans. Extending the repayment term of a payday loan to three months won’t help you pay less interest, it simply extends the time you have to repay it.
Which is Better for Borrowers?
When it comes to short-term loans, we always recommend opting for a longer, more affordable option like an installment loan. A three-month payday loan may be easier for borrowers to pay off, but it won’t affect the amount of interest you’re paying. Overall, installment loans are usually a better deal when customers need a fast loan with an affordable interest rate.
Many borrowers who choose payday loans do so because they have a hard time getting approved for a better loan product. Luckily, lenders who offer installment loans, like CreditNinja, cater to borrowers with poor credit scores. If your credit history is less-than-perfect, and you’re in need of some fast cash, a personal installment loan would be a superior choice to a three-month payday loan.
Why Choose CreditNinja?
CreditNinja is here to help when you need it the most. We offer more affordable, longer-term personal loans when you need some quick cash. With CreditNinja, the online application is quick and easy, and you’ll find out right away whether or not you’re approved. If approved, you could receive your cash as quickly as the next business day.
Apply today for a CreditNinja personal installment loan, and get your personal finances back on track.