Installment loans come in many flavors, but in most people’s cases it boils down to heading to their bank or something more like a payday loan. Both ways of getting these have their pros and cons, and understanding these are crucial for getting the money that you need, when you need it.
The biggest advantages from banks come in loan size and the interest rate. If you’re looking for $3,000 or more the single best place to get it is from your local bank or credit union. A loan of this size from a title or installment lender is going to be so expensive you’ll likely spend the next couple of years flat broke. It’s likely that you’ll get an APR in the range of 15o 20 and on the other types of loans it will likely be in the triple digits!
The downsides to bank loans is that they are slow and you will need at least a decent credit score to qualify. Alternative lenders, on the other hand don’t really care what your credit score is. Instead, they look at your monthly income and force you to sign up for automatic payments on your paydays so you can’t miss a payment.
Also, speed is key with these lender. Applying today can get you paid as soon as tomorrow. The lack of a credit check streamlines the process significantly, and the lender will then just transfer the funds straight into your checking account. Weekends and bank holidays can slow this process down quite a bit, but it is still going to be much faster than waiting for your bank to pore over your credit report and mail you the accept/decline letter.
If you’re willing to accept the high price of installment loan to get their speed and convenience, it’s the way to go. Otherwise getting a loan from your bank is always going to be the smartest option.
Geoff W. is a financial blogger that specializes in helping people get cash in times of need. His most recent post spells out legit ways to get a $1000 loan.