Both payday loans and installment loans give you cash up front, but they are repaid very differently. Choosing the right one can change how much you pay in total.
How a payday loan works
You borrow a small amount, often $100 to $500, and repay the full amount plus a flat fee in one payment on your next payday, usually within two to four weeks.
How an installment loan works
An installment loan is repaid in several equal payments over a few months or longer. Each payment covers part of the principal and interest, so it is easier to fit into a budget.
Key differences
- Repayment: one lump sum versus smaller scheduled payments
- Term: weeks versus months
- Cost: payday fees are high per dollar borrowed, installment APRs are often lower but run longer
- Amount: installment loans may allow larger amounts
Which should you choose?
If you need a small amount for a short time and can repay in one payment, a payday loan may fit. If you need more time, an installment loan may be easier on your budget. Compare the total dollars repaid, not just the payment size, and read our payday loan alternatives guide.
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Disclosure: CredQualify is not a lender and does not make credit decisions. We connect applicants with lenders in a network. Loan amounts, rates, fees and terms vary by lender and state, and funding times depend on the lender and your bank. Payday loans are expensive, short-term credit and should not be used as long-term financial solutions. Read the lender’s terms and see our Rates and Fees page before you accept any offer.