Loans in Illinois (IL)

Payday Loans and Installment Loans Illinois: Which One Should You Choose?

There are so many types of loans to choose from. And while diversity can be a good thing, it can be a tad overwhelming, especially if your comprehension and knowledge of the financial market is pretty limited. If you’ve reached this article, you might have a range of questions concerning payday loans and installment loans in Illinois and the differences between them. We plan on covering just that!

Payday Loans and Installment Loans Illinois: The Differences

While Illinois payday loans and installment loans are often interchangeable terms, they are suitable for different applications and are entirely different. Depending on your circumstances, one type of loan might be more suitable than the other. Let’s see!

Are payday loans legal in Illinois?

Illinois law does provide payday loan consumers with some protections against the cycle of debt. For example, a lender cannot roll over your loan if doing so would keep you in debt for longer than six months. Also, a payday installment loan's monthly payments can be no more than 22.5% of your gross monthly income The maximum you can borrow is $1000.

Introducing Payday Loans

For starters, a payday loan is a short-term type of loan – as the name already implies. There are many lenders that specialize in providing this type of loans, which feature a really easy and to-the-point application process. There is no collateral required, and the lender doesn’t check your credit beforehand. This makes this form of financing really time-efficient, making it suitable for emergencies or unexpected costs.

Essentially, in order to get a payday loan, all you have to do is demonstrate that you have a source of income, and you’re halfway there. In less than 24 hours, you can get access to the money you need.

What is more, there are many lenders online that facilitate payday loans; therefore, you can get your financing from the comfort of your own home.

While these are very positive aspects, it’s worth mentioning that the interest rates for bad credit loans are high. In fact, they are among the highest in the loan market. Hence, convenience and quickness do come at a cost. In addition to that, there are many scammers out there that portray themselves as being reliable when, in fact, this is far from the truth.

This is why you should know for sure that the lender you’re dealing with is reputable.

Introducing Installment Loans

Continuing our discussion on short term loans and installment loans in IL, an installment loan comes with different specifications. For one thing, it is also a short-term form of financing; however, the interest rates aren’t as high as in the case of payday loans.

In fact, the payment has to be made over a significant period, which is predetermined. The loans that belong to this category are car loans or mortgages, among others. The good thing about installment loans is that you can budget your finances, as you know the amount you have to pay on a monthly basis.

Also, the longer terms don’t imminently translate into a financial burden. Plus, getting such a loan is rather fast and easy. Even so, some types of installment loans require security.

So, which one is going to be? Do you find that a payday loan is more suitable for your specific circumstances, or an installment loan? Take the time to analyze the characteristics of each, as this is the only way in which you can make a sensible decision.