Short Term Loans

Are Payday Loan or Instalment Loans the Best Short Term Loans?

There are several different short term loans that are available. The two main ones are payday loans and instalment loans. You may have heard of payday loans and may not have heard of instalment loans. However, they do have some similarities. You can borrow small amounts of money and do not need to have a good credit rating in order to borrow the money. They are usually arranged quickly and you can borrow up to £1,000 There are some big differences between them as well and it is good to know what these are so that you can work out which will be the best option for you.

Repayment

With a payday loan you will have to repay everything that you borrowed plus the interest and the fees in one go, on the next day that you get paid. This means that you will have to find all of the money that you need to be able to do this and make sure that it is paid. If you are paid on that day, then hopefully you will have enough money available to do it. However, you will need to check, not only that the pay will be enough but also that you will have enough after any direct debits of standing orders go out on that day. You also have to consider that you will other things that you will need to buy as well and you need to try to ensure that you have enough for this as well.

With the instalment loan, the repayment will not be in one lump sum but it will be spread across a number of months. This means that you may find it easier to repay. You will not have to repay such a large amount of money each month which means that you will more likely to have money left over to cover the cost of other things that you will need to pay for as well.

Term

A payday loan such as those offered by Emu.co.uk will only last a few weeks. This is because it will need to be repaid in fill when you next get paid. You could even find that you will only have it for a few days. This can be extremely useful for anyone that is keen to not have a loan for very long. Some people are stressed by borrowing and having a loan so it will be particularly useful for them.

With an instalment loan the term will be longer. It will be determined by the amount of time that you take to repay. It could be that you will have a few months to repay or maybe longer. This might be due to how much you borrow as well as what the lender decides you will need to do. Although this will mean that the loan will last longer, it will also mean that you will be able to manage the repayments more easily. Rather than trying to repay a large lump sum, you will have less to repay and this means that you will have more money available for other things, such as other bills or food.

Cost

The cost of all loans will vary as lenders will charge different amounts. Therefore, it is not easy to say which if the loans will be cheaper. However, as you will take longer to repay the instalment loan, it is likely that it will be more expensive. This is because you pay interest for every day that you owe money and this loan will last longer, so have interest charged for longer. It is therefore likely that the instalment loan will be dearer but you might think that it will be worth it if it means that you will be able to manage the repayments more easily.