Have you ever wondered what is the difference between a payday loan, a short-term loan, and an installment loan? You’re not the only one. Even Google doesn’t give a clear answer on the subject. Well, they’re all unsecured loans that vary in length. A payday loan normally refers to a loan that you take out and pay back when you next get paid. A short-term loan is paid back within twelve months, whereas an installment loan could be any loan amount repaid over any period of up to seven years.
A Payday Loan
A payday loan was originally a loan that would be repaid in full by the individual who took out the loan on their next payday, normally within a month of the loan being given. These loans were often paid back within 14 to 60 days. The confusion came when some payday lenders advertised on TV that they could offer longer term loans. Because of this, the term payday loan can often be associated with loans of up to four months.
An Instalment loan can be repaid over one year up to seven years in length, with monthly repayments. These loans are often of higher value. For the large value loans, you’ll need to contact your installment lender Mississippi and discuss what options they may have. For short term loans, those that are paid from one to twelve months, it’s important to understand that interest is charged on a daily capped rate. This means the longer you choose to repay the loan, it will often lead to a larger, overall amount in total to be repaid.
A short-term loan is the industry term for loans of two to twelve months. These can vary quite dramatically in value and have a small number of monthly repayments.
When choosing a loan and looking at what is best for you, it’s very important to first see how much you can afford to repay each month and try to seek a loan that is affordable in the fewest possible payments.