How Installment Loans Are Similar To Payday Loans

A short term loan is also sometimes called a payday loan, and it is an unsecured loan that is on the shorter side, meaning lenders will want the money back in a shortened timeframe. Payday loans are great for people needing to pay things off pretty quickly because they are designed to cover expenses when people temporarily run out of funds, helping them to cover their bills, their car repairs, their hospital or medical bills, and any unexpected bills that arise during any given month. But these short term loans are not perfect for everybody.

For some, installment loans are better. These installment loans, which are loans that are given an equal amount each month over a longer span of time, are similar to online payday loans in their quick lending of money to people who need it. They are similar as well because some payday loans online are shorter in term and length, giving people needing money quickly a fast chance to get it without thinking about the years and years ahead when they will be paying these loans off. They do have lots of qualities that are similar in nature to shorter term loans, though, which should be explored.

For instance, these installment loans are like payday loans too because if they are not repaid within the specified timeframe, they may be able to be rolled over to extend the loan, meaning people are not responsible for repaying them even though fees are continuing to accumulate. Some people think money will come to them and unforeseen circumstances occur that prevent them from being able to pay of these online loans, but luckily most have installment loans that can be rolled over for such a purpose. This is another nice distinction that these loans have, which allows for a bit more freedom with lenders and borrowers.

However, there are certain lenders who have tried to throw criminal prosecution at people who have failed to repay their loans, but this is a small percentage. The CFSA, which is the industry association for these kinds of loans and lending practices, strongly denounces the practice, which actually is illegal in certain U.S. jurisdictions. This small amount should not stop anyone from trying to secure these installment loans, however. It is just one of those things that is important to note, if only to caution people so they look more carefully into their lenders.