What You Need to Know About Payday Installment Loans?
Today we will talk about the differrence of small consumer loans, payday installment loans and payday loans. The consumers must exercise caution when deciding whether to take out a loan to meet their emergency expenses. The cost of short-term borrowing remains very high.
What is small consumer loans?
Ask a lender if they sell small consumer loans. Be specific. If they don’t sell them, move on to a store that does. Stores that sell payday loans cannot sell small consumer loans. It is against the law. In addition to having lower interest rates, small consumer loans have longer terms than payday loans – typically lasting about a year or more. Stretching your payments out over time is one way to help keep them manageable. To ensure you stay in your small consumer loan long enough to pay down a significant portion of your balance, the new law prohibits lenders from rolling you over into a new loan in the first 75 days of your loan’s term. Additionally, by law (Illinois Law), a small consumer loan’s monthly payments can be no more than 22.5% of your gross monthly income. A lender can charge an Annual Percentage Rate (APR) of no more than 99% on a small consumer loan.
With their extremely high interest rates and many charges and fees, small consumer loans, payday installment loans, and payday loans can quickly transform a short-term financial crisis into a long-term debt problem.
What is payday installment loans?
Payday installment loans look like small consumer loans but payday installment loans have longer terms than conventional payday loans, lasting up to six months. However, payday installment loans are more expensive than small consumer loans, with APRs running as high as 400%. This is why you should make every effort to qualify for a small consumer loan – or, preferably, an even less expensive loan – before considering a payday product.
For example: Illinois law does provide payday loan consumers with some protections against the cycle of debt. A lender cannot roll over your loan if doing so would keep you in debt for longer than six months. Also, a payday installment loans's monthly payments can be no more than 22.5% of your gross monthly income.
What is payday loans?
A payday loans is truly a short-term loan. It has to be paid back in two to four weeks. Like the payday installment loans, a payday loan can carry an APR as high as 400% (average). The combination of the short term and high rates increases the likelihood that you’ll be unable to pay off your payday loan when it comes due.
For Example Illinois law: If this happens to you, please remember that you are entitled to enter into an interest-free repayment plan with your lender after you’ve been in debt for more than 35 days. This option applies only to payday loans, not to payday installment loans, and you must request it. Additionally, the Illinois law prohibits lenders from issuing a new payday loan if it would result in your being in debt for more than 45 days in a row. Together, these two provisions are designed to give payday borrowers some breathing room to pay off their old payday loan debt without getting buried under additional charges and fees.
With their extremely high interest rates and many charges and fees, small consumer loans, payday installment loans, and payday loans can quickly transform a short-term financial crisis into a long-term debt problem. You should exhaust all possible resources – family, church, friends – before you even consider taking out one of these high-cost loans.