Installment Payday Advance Loans

Most people understand payday loans to be a line of credit which must be repaid the next time the borrower is paid. The loan can be satisfied either by allowing the lender to withdraw the repayment directly from the borrower’s bank account or by billing the borrower the full amount when their next pay cheque has come due, which is typically within two to three weeks. Depending on the amount that the borrower needs, the payday loan can from half to all of their upcoming pay cheque. This is especially true when the lender’s assorted fees are factored in to the final amount. For the majority of payday loan borrowers, this is how the payday process will work for them. But there is another option which is known as the instalment payday loan.

When a borrower applies for an instalment payday loan, they receive the lump sum amount for which they were approved, just as if they had taken out a standard payday loan. This amount is either deposited in to the borrower’s bank account or handed over to them in the form of cash. Where this type of payday loan differs from standard advance loans, however, is in the repayment terms. True to its name, an instalment payday loan allows the borrower to repay the borrowed amount by sending instalments over an extended period of time. The due dates for these instalments are most often arranged around the borrower’s pay schedule. Another type of schedule may be arranged with the payday lender provided that the borrower can furnish proof that the money will be available for repayment at the agreed-upon time.

The advantages to this type of payday loan are many. Firstly, the borrower does not need to worry about relinquishing their entire next pay cheque just to satisfy their loan. After all, they likely still have other financial commitments to meet, and by signing away their whole pay cheque they may be risking timely payments on those obligations. Secondly, instalment payday loans may enable the borrower to take out a loan of a higher amount. This is made possible because the borrower will not be relying on one pay cheque exclusively to pay for the loan but rather several over the span of a few weeks or months. Therefore, the lender may be more agreeable to a higher loan knowing that the borrower will had additional funds, such as extra pay cheques, with which to cover it.

Despite the attractiveness of instalment payday loans, there are still some downsides of which borrowers should be aware. Perhaps the biggest drawback to these loans is the interest that accrues on them the longer that they go unpaid. Interest rates on payday loans are among the highest on the market, and a high interest rate accruing on a loan in the thousands of dollars will take longer to repay. In this way, an instalment payday loan might actually cost the borrower more money by the time it has been satisfied. When coupled with the number of fees that are usually attached to payday loans in general, borrowers could be staring at the prospect of debt that quickly spins out of control.