When you’re in need of some financial assistance, trying to determine which type of loan to choose can add unneeded stress to an already stressful situation. Cash advance, installment or payday loan, what’s the difference? The following information will help you choose which type of financial assistance is best for your needs.
Payday loans haven’t been around as long as other types of quick loans. In fact, the first become widely available in the 1990s. Payday loans were first available only in small shops. Here the borrower had to visit the store and speak to a person face to face about receiving a payday loan. In recent years, however, the ease of obtaining a payday loan as increased. You can visit various websites, fill out a quick application and – if approved – receive the funds in as little as 24 hours. While there are still brick-and-mortar locations where you can obtain a payday loan, online applications are by far the most popular option.
Payday loans typically require no credit check. This means that even with no or bad credit, you can still qualify for the loan. However, most companies who deal in payday loans will require a job, bank account and a minimum monthly income. Keep in mind though that every company will have their own set of guidelines for borrowing money.
Unlike payday loans, the installment loan has been around for a lot longer. Initially, these types of loans where only available by independent, small lenders. Now a days, most major banks have adopted these loans. Installment-type loans are generally used for a higher amount than what you can get from a payday loan. Like payday loans, however, they can be used for just about anything, including home mortgages, auto bill and medical charges.
While payday loans require the loan to be paid off in about two weeks time, installments can be taken out for a year or more. Since these loans are more like a traditional loan, there will be a credit check of some sort and collateral will be needed. This means that people with bad or no credit will probably not be able to obtain an installment-type loan. Furthermore, you will need a house, vehicle or some other valuable item to put up as collateral against the loan. This gives the financial institution a guarantee that if you don’t repay the loan, they will recuperate their funds via the collateral.