Payday loans VS Installment Loans

A payday loan must be paid every payday. It can be every 2 weeks or every 4 weeks if you only get paid once a month. I have extensive experience with both payment intervals but between the two, one payday loan a month beats two a month any day.

Now for installment loans. Installment loans did not become popular until legislation let it be known that they were going to restrict the outrageous interest rates being charged for payday loans to help protect borrowers from being taken advantage of.

All this did was tip their hand and give the payday loan lenders an opportunity to regroup and offer installment loans instead, which did not fall under the currently proposed interest restrictions.

Installment loans allowed payday loan lenders to continue to gouge desperate people looking for any way that they could in order to survive. Installment loans still charged outrageous interest rates but it was exacerbated by adding a 12-month long payment plan. A $1500 loan paid back over a year could end up costing you $5 or $6K including interest.

I took out an installment loan as an experiment and although I was able to pay the 12-month loan back in just under 3 months, the interest rate was through the roof. Three traditional payday loans would have been much cheaper over the same time frame.

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