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Home » Bad Credit Loans » Installment Loans » 4 Reasons To Get An Installment Loan For Bad Credit Instead Of A Payday Loan

4 Reasons To Get An Installment Loan For Bad Credit Instead Of A Payday Loan

May 23, 2020 by Brian Allen

installment loans for bad credit vs payday lenders
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If you need some cash to cover an unexpected expense, you may be considering an online payday loan. But even if you have bad credit, an installment loan is still a much less expensive option.

Why should you try to get an installment loan for bad credit rather than a payday loan? Here are just a few of the best reasons.

  1. Bad Credit Installment Loans Can Help You Build Credit

    This is one of the most important reasons to choose a bad credit installment loan. Payday loans are usually not reported to the major credit bureaus – even if you pay them on time, they won’t help you repair credit.

    Bad credit installment loans from a bank or online lender will always be reported to credit agencies. That means if you take out a reasonable loan and repay it on time, you may be able to build up your credit score – so you’ll pay less in interest and fees in the future!
  1. Payday Loans Have Much Higher Interest Rates

    A payday loan should only ever be your last resort if you need an emergency loan. This is because they typically have service charges of about $30 for every $100 you borrow. That means the APR (annual percentage rate) of a payday loan can be 300% or higher.

    In contrast, installment loans for bad credit have an interest rate that’s usually capped at 30% – and most people will qualify for a lower rate, or can find a lower rate by shopping around at multiple lenders.
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  1. You Can Borrow More Money And Repay Over A Longer Period

    With a payday loan, you typically can only borrow $200-$1,000, and you have between 2-4 weeks to repay it, depending on the date of your next payday.

    This is not the case with installment loans for bad credit. You can borrow much more – depending on your income level and credit score – and get loan terms of between 12 months to 5 years. This means you can borrow more money, and repay your loan more gradually over time.
  1. They Have Lower Late Fees & Costs

    In most cases, if you have trouble making a monthly payment on a personal loan, you can contact your lender and work out a solution, and avoid high late fees and other penalties – and unless you don’t pay for months at a time, your loan likely won’t be sent to collections.

    This is not true of payday loans. Payday lenders may charge you extremely high late fees and penalties – and if you don’t pay right away, your loan will be sent to collections quickly – which means you’ll be hassled by bill collectors, and your credit score may plunge even more.

Choose A Bad Credit Installment Loan Over A Payday Loan

Even if you have bad credit, you can usually find an installment loan that will offer you better terms, a longer repayment period, and lower interest compared to a payday loan – so explore your options for bad credit installment loans now, and get the cash you need.

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Brian Allen Financial Writer

Brian Allen

Editor-in-Chief

Brian Allen has been helping people make smarter financial decisions for over 10 years. As the Editor-in-Chief for Goloans, Brian writes about sage financial advice, “how to” articles, and reviews about lenders and creditors.

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4 Reasons To Get An Installment Loan For Bad Credit Instead Of A Payday Loan

Filed Under: Bad Credit Loans, Installment Loans Tagged With: installment loans

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