what are installment loans

What Are Installment Loans? And How Are They Different From Payday Loans?

We’ll explain how installment loans differ from payday loans – and why they’re usually a better choice. Read to learn more.

When an unexpected expense pops up and you need money quickly, you have many options to access cash or credit, including:

  • Credit cards
  • Cash advances
  • Lines of credit
  • Installment loans
  • Payday loans
  • Loans from a friend or family member

Depending on your credit score and particular situation, you might not have access to all of these avenues. If your credit score is on the lower end of the spectrum and you don’t have much cash saved, your best options are an installment loan or payday loan. But there are crucial differences into how each one works.

what are installment loans

Installment loans give you more time and flexibility

If you’re in need of emergency cash, consider an installment loan.

With an installment loan, you’ll have the opportunity to repay over several weeks or months, instead of repaying during your next pay period. That gives you more flexibility in how you manage your money and puts you in control of your normal expenses.

Even better, you can use an online installment loan and apply directly from your phone or computer. Many payday lenders still require you to apply in-person, which is inconvenient and time-consuming.

When to consider an installment loan

When you’re in a cash crunch, taking out an installment loan can provide you with quick cash access for unexpected expenses, like:

  • Car repairs
  • Medical expenses
  • Daycare/tuition payments
  • Rent and housing expenses
  • Work on your home, like broken windows or plumbing

Having cash on hand can help you avoid late fees, get back on your feet or get moving, and prevent even more damage (and more costs) from piling up down the road.

If managed properly, having an installment loan can mean the difference of making the best of a bad situation or falling deeper into debt because of accruing fees.

But what about the other options?

If you have a credit card with available credit, you can take a cash advance from that account. Again, you’ll pay fees for the privilege of pulling cash from your credit card, but if you’re in an emergency, it can be worth it.

But what if you don’t have a credit card to use? You could always try asking a friend or family member for cash and offer to repay. Even if you add interest, you’re likely to save over the cost of alternatives.

If you don’t have these options available to you, remember that an installment loan is generally a better option than a payday loan. The hallmarks of a payday loan are short repayment times tied to your next paycheck.

Bottom line

Broadly speaking, payday loans have shorter repayment times and much higher interest rates than any other loan available. Whereas installment loans give you more flexibility to repay and have interest rates as much as half the cost.

Taking out an installment loan, even if you think you have bad credit, can save you money in interest paid and give you a longer horizon to repay.

For more information, see if a Jora installment loan is available where you live.

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