Installment Loans are Destined to Fail

For anyone that is used to getting payday loans on a regular basis over the years, you already know that due to regulation, payday loans are a thing of the past except for in very rare situations that are dictated by region.

Just like I predicted the eventual end of the payday loan, so too, do I predict the inevitable end of the installment loan. The reason why I can make this statement is that the business model just doesn’t work long term.

Payday loans were popular because of the use of short-term loans. Installment loans on the other hand are long-term. Usually 1 year in length. This means that you will pay outrageous interest for 12 months instead of just 1.

You’ll get a larger lump sum upfront but once that’s gone you’ll be forced to take out another long-term loan which clearly mimics the payday loan cycle. The average person will not be able to sustain the payments for more than a few months which will result in a default and eventually, the fall of the installment loan.

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