Before deciding which type of loan is better, one must take into account the situation. Both payday and installment loans for poor credit can be beneficial in different ways, despite recent criticism from advocates for consumers. There are those that are beneficial and legit, and others that have the effect of dragging consumers into a cycling of owed debt.
Payday loans as well as installment loans are often referred to as small-dollar and high-cost loans. This is because they usually carry high interest. That’s because the borrowers are usually low-income, or carry poor credit to no credit. Hence, they are considered subprime borrowers and usually don’t have access to cheaper credit options like credit cards or home equity lines of credit via institutions like credit unions and banks.
Here are some of the differences between payday loans and installment loans so that a potential borrower can make an informed decision.