Nowadays there are all kinds of loans available to borrowers. This provides a variety of options to an individual on the one hand, but on the other hand, it requires certain knowledge so that the borrowers can figure out which loan satisfies their needs and possibilities best. Let us have a look at two popular loan types – a payday loan and an installment loan.
What is an Installment Loan?
An installment loan is either a secured or unsecured loan (one that does or does not require a pledged property) that is provided for a fixed period of time with a quite high-interest rate (see the details below). The paying off takes place in installments over a certain period of time, hence the loan name. Many mortgages and loans are in fact installment loans. There are quite a few installment loan providers that are available online.
What is a Payday Loan?
Payday loans provide smaller amounts in a shorter time period as compared to the installment loans. Borrowers that do not have a perfect credit history can still apply for this kind of loan. The loan provider offers the money which is usually to be repaid with the next paycheck, including the APR. In this case, the paycheck presents loan security and no collateral is required. Just like the installment loans, payday loans are often available online.
It has to be noted that payday loans are not permitted in some states.