If you are looking for a short-term loan, then you may wonder which option to take. You may not really know much about the different types of loans that are available and you might wonder which will be most suitable for you. It is a good idea to understand what the similarities and differences are so that you can choose between the loans and find the one that will be the best for you.
Similarities Between the Loans
Both of these loan types require no credit check. This means that if you have a poor credit record then you will be able to use them. Most lenders will do a through credit check and will only lend to those that seem worthy of a loan. They will be looking for different things but they will want to be sure that you will be able to repay the loan. They will look for evidence that you have repaid loans previously or have been able to keep up with regular repayments on bills or contracts. If you cannot provide the evidence that they want then you will not be able to get a loan like this. However, short-term loans will be available to you still as they are not so concerned with whether you have got a good credit history or not.
They are also both quick to arrange. The lenders realise that this sort of loan could be used in emergency situations and therefore will need to be arranged quickly. It is possible to get some loans organised within a few hours, but this will depend on the lender. If you do need the money really quickly, then it is wise to check with the lenders to see how long they are expected to take and this will help you to make sure that you get the money for when you need it.
Differences Between the Loans
The loans do have differences as well and the lenders will have various differences between them. However, the main difference is with regards to repaying the loan. The payday loan will need to be repaid in full very quickly. The idea is that you borrow money to keep you going until you next get paid. Then you will repay all of the money that you borrowed and the interest all in one go. This means that you will be able to clear the loan really quickly.
With an instalment loan you will pay it back over a longer time. You will not be expected to pay it all in one go but you will pay it over a series of months. Although this will mean that the repayments will be smaller and the loan should be easier to manage, it will mean that it will last longer.
Deciding Which is Best
You will need to make sure which option will be the best for you. You might like the idea of being able to clear a loan quickly and get it paid off. However, you will need to carefully calculate whether this will be something that you can afford. You need to find out exactly how much you will need to repay and when it is due to be repaid in order to do this. You can then work out how much money you will have at that time and whether, once you have paid, whether you will then be able to afford to pay for everything else that you need.
The instalment loan can make things easier. You will be able to repay smaller amounts each month. This can make it more affordable and reduce the risk of you missing the repayment. If you fail to repay, you will get extra charges which will make the loan more expensive. By spreading the payments and making them smaller, the chances are that you will be more likely to be able to afford them and this could mean that you will be more likely to avoid these extra charges. It does make the loan more expensive because you are borrowing the money for longer. However, if you find it easier to make the repayments then it can be worth paying the extra. It could also make it easier for you to manage your other expenses during the course of the loan.
The decision will very much depend on your personal circumstances. However, if you think that you will find it easier to manage with instalments then it is likely that will be the best choice for you. However, whether one loan is better than the other is a very personal decision and you will find that some people prefer one type and others refer the other type. There will also be differences between the specific lenders making some better than others. Therefore, you will need to do some research to find out for yourself which will be best for you.