When you need cash fast to handle an emergency situation or an urgent project or other needful expense, you can’t wait while a bank mulls it over for days or weeks on end (and then likely not get approved anyway.) And most traditional lenders won’t cover you for personal or emergency expenses but stick largely to mortgage and auto loans. What are you options when you need a short-term loan of a relatively small amount? Typically, you will hear about payday loans versus installment loans, but there is also a “blended” option called “payday installment loans.”
It’s true that title loans are also in the arena, but if you don’t own your car outright or don’t like the idea of risking your only means of transportation, then that option is out.
Payday Versus Installment Loans
A typical payday loan allows you to borrow between $100 and $1,000 and requires you to repay the entire loan amount with all interest/fees within 2 to 4 weeks (out of your next paycheck). The exact amount you are allowed to borrow will depend on your last paycheck or last few paychecks.
Payday loans also may require some form of collateral and have some of the highest APR rates (though total interest may not be that high since the principle is so low.)
Installment loans allow you to borrow more: say between $1,000 and $5,000. They are based on your income over a longer preceding period than payday loans, and you can borrow for longer periods, maybe between 6 months and five years.
Installment loans let you repay your loan in manageable monthly installments, hence the name. They will have lower rates than most payday loans.
What Are Payday Installment Loans?
Payday installment loans strike a balance between payday loans and installment loans (also, hence the name.)
They do not limit your borrowing power by your last few paychecks, but they will be for lower amounts than most ordinary installment loans. The loan term may be something around a few months, and you will make installment payments during that time. APR will vary but could be mid-range between payday and installment loans.
A larger-end short term loan would be best served by a regular installment loan, and a very small loan you can repay next paycheck might be best served by a payday loan.
But when you need more time than just one pay period to pay off the balance but not more than a few months, a payday installment loan may be the best choice.
At Bonsai Finance, we offer competitive rates on payday loans, personal installment loans, and payday installment loans. We give you plenty of loan options as to type and as to terms.
If you are considering a short-term “non-traditional” loan that gets you the cash you need fast with minimal hassle, Bonsai Finance can approve you regardless of credit score and without a credit check. And we can discuss with you your options and help you decide on a loan-type.