Many families in Canada are living from paycheck to paycheck. The modern economic situation is very tough so that it is becoming quite hard to make ends meet.
What if you have an urgent financial difficulty and your emergency savings account has already been emptied out? Where can you get extra accessible cash? This is when installment loans Canada and payday loans come to mind as nobody wants to have their bills pile up.
So, let’s have a closer look at payday installment loans Canada to help you choose the most suitable option.
Short-Term Installment Payday Loans Canada
Once you’ve decided that you have a financial emergency and need help to stay afloat financially, you should get to know the main difference between installment loans and payday loans.
Yes, they are different despite the fact that both of these personal loan types need to be repaid.
Payday loans are usually short-term, although you may come across long term payday loans as well. But generally, you need to pay back this type of credit within a month including the interest and additional fees.
At the same time, installment loans Canada allow the borrower to take a bigger sum of money for a longer time period. In case you want to qualify for a bigger cash amount for up to a year time period or even longer, then installment loan might be a better option.
How to Qualify for a Payday Loan
On one hand, a payday loan might seem an easier lending option and the only thing you need to have is a regular source of income.
Yet, you need to be ready that this type of borrowing charges higher interest rates which can go up to 400% annually and higher. As a result, your $100 loan will become a $115 debt in just 15 days.
Now think about bigger sums of money that people take on average. Often the borrowers aren’t able to repay their payday loan in time, which results in transforming it into a much longer-term debt. In other words, your payday loan trap can make you fall deeper and deeper into it until you manage your finances wisely.
Now let’s have a look at an installment loan Canada and see if it’s more suitable.
Pros and Cons of Installment Loans in Canada
Speaking of this type of loan, it will require you to go through a long application process. But the main benefit is that you will be able to receive the money at a lower interest rate. In addition, there are no extra fees and hidden pitfalls, so you realize exactly how much you should pay off every month.
Some borrowers can even qualify for bad credit installment loans Canada, but it’s better if you do your best to improve your credit before you take out a loan.
Don’t get tempted by “no credit check installment loans Canada” ads because, in reality, all lenders perform at least soft credit check before they make the final decision.
This type of borrowing allows you to have an extended time period for paying it off. Also, you may consolidate your debt later if necessary.
It would be useful to learn more about the credit score ranges.
Which Loan Is More Suitable for You?
As it was mentioned before, payday loans are a faster method of getting extra cash. But you may end up taking more and more of such a short-term loan to cover your expenses or pay the upcoming bills.
With an installment loan, you will be able to get a lower interest rate and know the exact end date when your debt will finish provided that you’ve made the regular payments in time and in full.