Installment Loans No Credit Check vs Cash Advance Loans
Installment loans are those everyday loans we pay back in regular increments over a period of time. When we purchase a vehicle and pay for that vehicle over a period of 3 years, or 4 or 5, we have what is called an installment loan. A 30 year mortgage represents this kind of debt and repayment as well.
Those personal installment loans for larger purchases generally require a stable financial situation and a higher credit score.
However, there are also bad credit installment loans with no credit checks required which can provide a smaller amount of funds for urgent situations when one could not normally get a regular installment loan which requires a solid finance situation and good score.
The question is “Are installment loans with no credit checks better for you than payday cash advance loans?”
How are the two different? Is one better than the other? Can a person with a bad credit score even get an installment loan which can be paid back over a longer period of time?
Let’s look at these two loans and see what you might have available to use and which might be an option for your family’s needs.
Installment Loans No Credit Check vs Bad Credit Cash Advance Loans
First off, let me assure you that there ARE bad credit installment loans which require no credit check. Based on your income alone, and not your income along with your credit score, these bad credit installment loans, also known as payday installment loans or installment payday loans, have a much higher annual percentage rate than a traditional installment loan with fair credit or good credit, but they are available.
So why even question which route to take then, a high risk, high cost payday cash advance with a big finance fee due your next paycheck or a loan to pay back over a longer period of time? Wouldn’t an installment loan with regularly set due dates over the course of several weeks or months be better than those expensive payday loans where it is scheduled as due your next pay day?
There are two sides to everything as you well know. Let’s check out those two sides, and you’ll get a better feel for which loan will actually work best for you.
With an installment loan, your finance fees and loan amount will be added together right from the beginning to become your total amount due with repayments scheduled on a regular basis over a period of time. Most states limit these loans to no more than 140 to 180 days or so. While you will have a shorter time of regular repayments than a typical, good credit installment plan, you are paying some of your finance fees and your principle each time you make your payment, and it is stretched out at least those 4 – 6 months.
With cash advance loans, you will have your loan amount plus finance charges scheduled as due in full at your very next pay day. These truly are short term crisis loans that are meant to just tide a person over until the next paycheck come in. The idea is to pay back everything in two weeks or four weeks, whenever you get paid, but with an option to extend the loan if you can not pay it all back at that time, an “extension” in this case meaning the lender will create a new loan period until your NEXT pay check (with more fees of course).
In reality, since finance charges on payday cash advances are so high to begin with, many people who take these loans won’t have all they need to pay everything back in that short amount of time. They take the option of just paying the finance charge and not paying any of the principle, or they pay some small part of it.
In other words, the term of the loan has ended, but the lender just starts the process all over again, only this time with no money given out, just NOT given back, a kind of backwards lending. This is called a “rollover”. You are not paying your principle down throughout the loan if you do not voluntarily add extra funds when you make your payment. You are starting an entire new loan all over again, a roll over, with new finance charges due yet again on your next paycheck, and all of the principle due which you did not pay the first time around.
The good thing about paying in installments is that you are working towards getting rid of the payday debt on a regular interval. The bad thing is that you are still paying a high finance costs plus some mandatory additional principle each time, and quite probably, this combination will make your monthly or bimonthly payments higher than just paying the finance charge that comes with advance loans without any principle tagged on or with just a little or your principle voluntarily added at the due date before a roll over.
Additionally, if you get paid once a month, your due date on your cash advance payday loan will be due in 30 day increments. Many times payday installment loans are due every two weeks.
Between the higher payments, or at least comparable payments, and the more frequent payments, the installment loans may seem more of a burden in those first few weeks following a real financial crisis.
Still, the benefits of regularly set payments where you can pay off the actual debt without carrying the principle over each time with new a new rollover loan and new finance charges over and over… and over again may make those installment loan payments a wiser choice in the long run.
When it all boils down, you need to look at the situation in the immediate time period after your period of need and see how you feel you’ll be handling any loan you get right now.
If you really can pay off the entire loan amount (which means the full loan AND the finance charges) on your very next pay day, you may save a little getting a cash advance, paying the one time finance charge and then also paying the principle off completely with your next paycheck.
If you will still be on wobbly feet shortly after your emergency cash loan and you believe you may find yourself just paying finance charges only and not paying the principle off, or at least not paying a good amount of the principle back over a couple of paychecks to get the entire amount paid off quickly, an installment loan would most likely be the wiser financial choice overall.
As a side note, both kinds of loans generally do not have any penalties for paying the money back at an earlier date. However, when you pay a payday cash advance back early, you won’t save a whole lot either because your finance charge is your finance charge for that payday period regardless. You will save however when you are paying off installment loans early since you are cutting the time you need to pay the interest on the principle.
Additionally, remember that adding ANY extra amount towards the principle of a cash advance will make your finance charges lower the next time around, making even cash advances a little easier to pay down more the next time around. Check with your lender to see what the minimum you can pay towards your principle is so you can prepare yourself to try to pay SOMETHING towards your principle each time even if you don’t pay the entire loan off immediately. Anything helps if you thought you could retire a cash advance loan only to find you couldn’t.
Both of these products, no credit check installment loans for bad credit and short term cash advance loans are available to you no matter how your finances stand at any given time. Both are expensive, and both should be sought out cautiously.
Never the less, when you have a family emergency or have an urgent situation that requires cash you don’t have NOW, do the best you can and make the wisest of decisions, understanding where you really are. Then do all you can to get rid of any loan you have as soon as you can. You’ll all sleep better at nights when you do.
If you’re interested in finding bad credit installment loans not payday loans, begin with some searches such as “bad credit installment loans online” or “bad credit installment loan finance companies”.
If you are so inclined, consider also searching for “finance companies” or “finance companies for bad credit” or even “poor credit loans from banks”. While many of them will pull a credit check, many of these companies and some banks and credit unions will offer installment loans to people with lower scores, perhaps with some collateral and even sometimes with no collateral required at all.
Poor credit loans from banks and finance companies will still carry higher interest rates, but those rates won’t be as high as either a cash advance due in full on payday or cash advance loans with installments. If you have the time and strength to check into this route as well, you will probably save quite a bit of money after your crisis.
This is the 4th of a series of articles on no credit check loans for bad credit people.
See the entire series with URLs as they become available listed here:
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