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30 Day Loan Quote – Loan Benefits – NOT A Payday Loan
Installment Loan Benefits
The preferred loan type for bad credit is an installment loan, not a payday loan. The reason is simple, it is better for you financially. If you qualify, here are some of the benefits that you will see.
1) 30 Days Or More To Pay
The average payday loan can not be stretched out to 30 days or more without a lot of additional fees. The average loan term is actually between 10 to 14 days no matter what anyone tells you.
Installment loans are different. They can go for multiple months which makes everything easier. Making a lump sum payment on your next payday is difficult which is why most payday loan borrowers get into trouble.
The extra time to pay also has the benefit of lowering each individual payment. instead of paying off the loan in one payment, you can break it down. If you go for a 30 day installment, you might be able to break up your payment over your next two pay periods. This will cut your payment in half, making it more manageable.
2) Lower Interest Rates On Average
30 day payday loans would come with quite a bit of fees. While they do not charge interest, at least not technically, they charge fees. A typical fee might be somewhere between $15 to $20 per hundred dollars borrowed.
So, a $300 loan would have fees of $45 to $60. At first glance, that might not seem like too much of a fee considering that you need the loan for an emergency. Calculate it into an interest rate though and you will see the problem.
Depending on the actual term of your loan, the interest rate could be 400% or higher. That is huge. No company could go out there and simply charge you this high of a rate, which is why it is disguised in fees.
Installment loans will almost always come with lower interest rates. This may drive the cost of the loan down in comparison to the average payday loan.
3) More Funds Available
With a 30 days or shorter payday loan, you can only borrow so much money. This is for two reasons.
First, payday loans are limited by the state that you live in. Some states do not even allow them. If yours does, you might be able to borrow 1000 dollars or you might only be able to borrow 200 dollars.
Another limitation is the short loan period. With shorter loans, you can only borrow so much money and still be reasonably expected to repay it. This is, again, a way people have gotten into trouble in the past with payday loans. Even a simple $500 loan can be hard to pay back in one lump sum. It can wreck a paycheck. And when your paycheck is wrecked, you become far more likely to need another payday loan immediately.
With longer installment loans, you can borrow more because, for one, you have longer to pay it back. Take a 3 month loan, for example. You can reasonably borrow three times more money because you would have three times longer to pay it back than with a 30 day loan.
In addition, installment loans are not limited to the extent that payday loans are. You are allowed by the state to borrow more money.
Not Another Payday Loan
Payday loans have come under fire recently and for good reason. Sure, they can be a good tool for those that need money but have bad credit. This is where the benefits stop.
The problem comes when lenders and borrowers do not act responsibly. Lenders approve people for too much money and borrowers accept more money than they can pay back in one lump sum.
The result of all this works out to the advantage of the lender. The borrower can not pay back the loan on time and instead extends it. This results in another set of fees. If the borrower rolls the loan over several times, extending it to 30 days or more, they will pay a fortune in fees.
This is just the tip of the iceberg when it comes to problems with payday loans, especially those used improperly. Consider some more.
1) Short Loan Terms
30 day terms are really unheard of in the payday world. Most will be for ten to fourteen days. Even if you could get a 30 day term, that still would not be enough time.
Short loan terms of less than 30 days puts the borrower under an enormous amount of stress. They would have to take a large portion of a single paycheck to pay back the loan.
If they had to take a loan to pay for an emergency, they probably do not have a lot of cushion in their paycheck. This means that, even with up to 30 days to pay, most borrowers would have some problems.
2) Low Dollar Amounts
If your emergency is for a few hundred dollars, you are in luck with a payday loan. If, on the other hand, you need more money to pay for a real emergency, you may be in trouble.
The low dollar amount is good in one way and bad in another. If you only have 30 days or less to pay a loan back, it makes sense to limit how much you can borrow to make the loan manageable.
On the other hand, limited funds make the loans less useful for a lot of situations. Installment loans do not come with the limitations that payday loans have.
You can borrow more money and have much more time to pay the loans back. The ability to stretch out the loan term will let you take out more money and still have a payment that is often much lower than a payday loan payment.
3) Predatory Lending Habits
Let’s face it, payday loan lenders have been notorious for using some dodgy tactics over the years, particularly with collections. They felt that they had to use strong arm tactics just because people have bad credit.
Fall behind on a payday loan and you will often get harassed beyond belief. Avoid payday loans and help keep yourself away from predatory lending.
Of course, every lender is different and there maybe some good payday lenders that are nice and polite, but that is not the norm. In addition, you could find some installment loan lenders that are less than amicable.
Because you are less likely to run into problems paying a longer term installment loan, you will be less likely to deal with collections tactics at all.
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