"Payday Loans" and "Installment Loans" in Brownsville, Texas

Both payday loans and installment loans are loan types that will help you when you are in sudden need of money. Read through the discussion below to know about the similarities and differences between them.

Payday loans in Brownsville: 24/7 online approval $100-$1000 cash advance!

"What is a Payday Loan?"

Payday loans, on the other hand, are short-term loans and usually dispense up to an amount of $1000. They are often referred to as check loans or cash advances. As payday loans don’t involve any credit check, the approval takes place almost instantly.

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Installment loans in Brownsville: Up to $3000 personal loans up to 24 months!

"What is an Installment Loan?"

An installment loan is a loan that gets paid back through a pre-decided number of monthly payments. It can mainly be of three types, auto loans, personal loans, and mortgages. If you can produce all the required documentation, your loan application would be approved and the amount would most likely be credited to your account within 24 hours. You can take personal loan online up to $3k and up to 24 months.

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The process of repayment

An installment loan is always repaid over time. The lending organization or lender needs to work with the borrower in order to ensure that the planned monthly payments are manageable and reasonable. Every month would see the principal and interest reduce and the repayment process would continue until the borrower pays off the entire loan.

The borrower needs to repay a payday loan along with interest on his or her next payday. To get a payday loan, you might need to sign a check for the lender beforehand; some lenders also demand access to the borrower’s checking account so that they can get the loan amount auto debited. Individuals who fail to repay a payday loan on their next payday needs to renew it.

The loan approval procedure

When you apply for an installment loan, the lender would first assess your ability to pay back the loan before approving your application. Some lenders do approve installment loan application submitted by people with bad credit. However, before that they use a monthly income/expense budget formula for making sure that the concerned borrowers would be able to pay the monthly installments.

The approval process of payday loans are much simpler. However, the borrower becomes the victim of steep interest rates if he or she fails to repay the loan on the first payday after getting the principal. The system of payday loans allows borrowers to request repayment extensions; however, approval of such requests is always accompanied by hefty financial charges.

Effects on the borrower’s credit score

Both payday loans and installment loans have strong impact on the borrower’s credit score.

In case of installment loans, the lending organization/lender reports the lending data to all credit bureaus. If the borrower succeeds in making timely payments every month, he/she would be able to build a healthy credit history and see the credit score growing over time.

Default on pay loans is extremely common. If you fail to repay your payday loan amount on your next payday, you might see your credit score drop. Taking repayment extensions and applying for an additional loan might stop you from becoming a defaulter, but it would augment the loan fees and interests leaving you in a cycle of debt. The cycle of debt will eventually have an ill impact on your credit rating.

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