Offers of non-bank companies usually include quick loans online or provided in stationary branches, which are repaid at the end of the loan period. However, you can also find proposals for borrowing in installments. What is the difference between installment and short-term loans?
Short-term loans and installment loans
In both cases, i.e. with short-term loans via the Internet and online installment loans, there is a commitment that allows customers to obtain external financing for any purpose. In the offers of loan companies, installment loans are marginalized. Definitely more offers can be found on short-term loans, so-called payday . They are provided to the customer’s bank account or paid in cash to the borrower’s account after the conclusion of the loan agreement. Their amount ranges from a few hundred to even tens of thousands of euros, although they are generally awarded up to a maximum of several thousand euros. The most important difference between installment and short-term loans is the fact that the first of them is repaid gradually, according to the agreed installment repayment schedule, reducing your debt to the lender, and the second one is repaid at the end of the loan period.
When should you opt for installment loans?
An installment loan is a non-bank loan, usually long-term, which is another factor that distinguishes it from a short-term loan. Repayment in installments of the loan causes that the client gradually repays his debt, but at the same time it requires the borrower to obtain the appropriate amount of money by way of installment repayment. You must make sure that you pay the installment exactly on the date indicated by the lender, because the delay may generate the need to pay additional interest and other fees that will be charged by the loan company.
It is worth choosing an installment loan if we want a higher loan amount and want to pay it off gradually, which will be more convenient for us.
The advantages and disadvantages of installment loans
The advantage of installment loans is that the repayment of the obligation is less burdensome to the household budget because each installment is only part of a larger commitment. As part of installment loans, you can usually get a higher amount of liability, especially when compared to the so-called Checkerz. In this respect, the installment loan is similar to a bank loan, but the conditions for its receipt and formalities to be met are much simpler than in banks.
The disadvantage of installment repayment of a non-bank loan is usually their higher cost than in the case of short-term loans. There is also no possibility to take out an installment loan for free, in the promotion for new clients.
When to decide for a break
A short-term loan, ie a short-term loan provided via the Internet or a stationary one, differs from the installment loan in that it is granted for a shorter period, and it is paid once, at the end of the loan period. Such repayment can be a big burden for the client’s household budget. However, its costs are usually lower than in the case of installment loans. You can also take advantage of the promotion for the first free loan for people who have never used the loan company’s offer before.
The disadvantage of short-term loans is the relatively lower possible liability limit, which is usually several thousand euros. A one-minute contract is drawn up quickly, even within a dozen or so minutes of the loan application being submitted, which is its advantage and the element that distinguishes it from installment loans.
Depending on the individual preferences of the borrower and the financial situation in which he is located, a different loan – installment or short-term – may be a better solution for him.