Compare payday loans and installment loans

Find out which option is right for you

Last updated:

We value our editorial independence, basing our comparison results, content and reviews on objective analysis without bias. But we may receive compensation when you click links on our site. Learn more about how we make money from our partners.

If you’re on the lookout for a fast loan or have bad credit, you might be considering an installment loan or a payday loan — also referred to as a short-term loan. To help you decide which one is the better choice for what you need, we’ve broken down each loan type to help you understand the differences between the two.

Our top pick: OppLoans Installment Loans

  • Min. Loan Amount: $500
  • Max. Loan Amount: $5,000
  • Turnaround Time: 1 business day
  • Loan Term: 9 to 36 months
  • Requirements: Direct deposit, meet minimum income requirements
  • Easy online application
  • Quick approval
  • Fast funding
  • Long repayment terms

Our top pick: OppLoans Installment Loans

Comes with the option to change your due date so you won’t fall behind on repayments.

  • Min. Loan Amount: $500
  • Max. Loan Amount: $5,000
  • Turnaround Time: 1 business day
  • Loan Term: 9 to 36 months
  • Requirements: Direct deposit, meet minimum income requirements
Promoted

Quick definition: payday loans vs. installment loans

Payday loans

These are small credit solutions of around $100 to $1,000 designed to be repaid in the short-term. These loans can be applied for by people with less-than-perfect credit history and repaid in one lump sum, usually on your next payday. The annual percentage rate (APR) for these loans is quite high, usually in the hundredth percentile, but the actual rate you are offered depends on the state you reside in. Payday loans are not legal in every state.

Installment loans

These loans are for larger amounts and for longer terms than payday loans. Loan amounts typically run from $1,000 to $10,000 and terms can be from 3 to 18 months. The payments made to this type of loan are made in installments, hence the name. While installment loans have come to be associated with bad credit borrowers, they can be taken out by those with good or bad credit and are available from banks, standalone lenders or credit unions.
Find out the regulations for payday loans in your state

The key differences

The typical borrower

Payday loans

While every borrower differs, the flexible eligibility criteria attracts borrowers that:

  • Have bad credit or no credit history
  • Lower-income earners
  • Have no bank accounts if they are applying in-branch or at check cashing stores
  • Need small loans with a quick turnaround

Installment loans

As with payday loans, there is no “typical” borrower with an installment loan. Borrowers can:

  • Have good credit or bad credit, with lenders catering to both
  • Be looking to borrow a larger amount and pay off the loan over time
  • Want to take out a secured or unsecured loan

Loan amount and terms

Payday loans

  • Loan terms and maximum amounts are regulated at a state level
  • You can usually borrow between $50 and $1,000
  • Terms are normally offered between 7 and 60 days

Installment loans

  • This varies greatly between lenders. You can borrow anywhere between $1,000 and $100,000 depending on the lender and your eligibility
  • You pay off the loan in installments over a term of between 6 and 60 months (5 years)

How much it will cost

Payday loans

  • Payday loans are notoriously costly. Typical APRs reach into the hundredth percentile, but what you will actually pay depends on what state you live in. Remember that payday loans are lent over the short-term, so while APRs are a good representative cost of the loan, you will not pay back that full cost over a year.
  • If you cannot pay off the loan within the terms provided, it could lead to refinancing or rolling over the remaining amount. Doing so can incur extra fees and charges.

Installment loans

  • Installment loans vary greatly in costs. How much you will pay depends on how good your credit score is, whether the loan is secured or unsecured, what lender you applied with, among other factors. Some lenders will let you get a rate estimate before you apply without it affecting your credit score.

Lenders offering the loans

Payday loans

Weighing up all your loan options is important before applying for any type of credit. Are payday loans or installment loans the better bet? It depends on what you need.

Compare payday and installment loan providers

Updated December 16th, 2019
Name Product Filter Values Max. Loan Amount Turnaround time Requirements
Check Into Cash Payday Loan
$1,000
1 to 2 business days
Bank account, email address, phone number, US citizen or permanent resident, ages 21+
Plus, get access to check cashing, cell phone top ups, bill pay and more at one of its many storefronts.
OppLoans Installment Loans
$5,000
1 business day
Direct deposit, meet minimum income requirements
Comes with the option to change your due date so you won’t fall behind on repayments.
Fast5kLoans Short-term Loans Connection Service
$35,000
As soon as the next business day
Regular source of income, verifiable bank account, US citizen, ages 18+
Get connected with multiple lenders you might qualify with — even if you have bad credit.
CashNetUSA Loan
Varies by state
As fast as same business day
Regular source of income, bank account, US citizen or permanent resident, age of majority in your state
Sign up for its discount program to get access to coupons and deals on everything from dining out to tax services.
LendYou Short-term Loans
$15,000
Same business day to 1 business days
$1,000+ monthly income, direct deposit, US citizen or permanent resident, ages 18+
Get offers from potential lenders in minutes by filling out just one online form.
Slam Dunk Loans
$50,000
Same business day to 1 business days
Employed, $800+ regular monthly income, checking account, ages 18+, US citizen
Fill out a simple online form to compare offers from several lenders that may be able to help.
Jora Installment Loans
$2,600
1 to 2 business days
Active checking account, regular source of income, email address
Get access to tools to help you plan a career move, make some extra cash or search for a better-paying job.
CashUSA Installment Loans
$10,000
As fast as same business day
Regular source of income, bank account, US citizen or permanent resident, age of majority in your state
Explore its online education center to get tips on budgeting, how to prioritize your bills and more.

Compare up to 4 providers

Updated December 16th, 2019
Name Product Filter Values Max. Loan Amount Turnaround time Requirements
 Check Into Cash Installment Loans
$3,000
1 to 2 business days
Bank account, email address, phone number, US citizen or permanent resident, ages 21+, $3,500 minimum income in California
Borrow money with lower payments and more time to pay than a traditional payday loan.
Zaplo Installment Loan
$1,200
As soon as the next business day
Regular source of income received biweekly or semi-monthly, Missouri or Utah resident, checking account with automatic deposits, not a military service member
Borrow up to $1,200 — but only if you live in Missouri or Utah.
Fast5kLoans Short-term Loans Connection Service
$35,000
As soon as the next business day
Regular source of income, verifiable bank account, US citizen, ages 18+
Get connected with multiple lenders you might qualify with — even if you have bad credit.
OppLoans Installment Loans
$5,000
1 business day
Direct deposit, meet minimum income requirements
Comes with the option to change your due date so you won’t fall behind on repayments.
Jora Installment Loans
$2,600
1 to 2 business days
Active checking account, regular source of income, email address
Get access to tools to help you plan a career move, make some extra cash or search for a better-paying job.
HonestLoans Installment Loans
$50,000
Same business day to 1 business days
Must be employed and receive regular income, earn at least $800 a month, have a checking account and be an 18+ years old legal US citizen.
Get a flexible installment loan with fast funding through one easy online application form.
LendYou Short-term Loans
$15,000
Same business day to 1 business days
$1,000+ monthly income, direct deposit, US citizen or permanent resident, ages 18+
Get offers from potential lenders in minutes by filling out just one online form.
CashUSA Installment Loans
$10,000
As fast as same business day
Regular source of income, bank account, US citizen or permanent resident, age of majority in your state
Explore its online education center to get tips on budgeting, how to prioritize your bills and more.
CashNetUSA Loan
Varies by state
As fast as same business day
Regular source of income, bank account, US citizen or permanent resident, age of majority in your state
Sign up for its discount program to get access to coupons and deals on everything from dining out to tax services.
Possible Finance Mobile Installment Loans
$500
As fast as 1 business day
Checking account with 3+ months of banking history, $750+ monthly income, live in eligible state, ages 18+
Borrow up to $500 with just a few swipes — but only for residents of 5 states.

Compare up to 4 providers

Are payday loans available in my state?

Was this content helpful to you? No  Yes

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.

2 Responses

  1. Default Gravatar
    SabrinaSeptember 20, 2017

    I’m trying to figure out what’s better to do, a payday loan or installment loan? I need a few extra money for rent I’m short about 230 dollars. What is my best option? I know I can’t pay it back all at once and I’m trying to pay back little as possible.

    • Default Gravatar
      JonathanSeptember 21, 2017

      Hello Sabrina,

      Thank you for your inquiry.

      Generally, payday loans or also known as short-term loans payment terms is 2 weeks to one month. Looking at your repayment preference, it may be more advisable to have an installment loan.

      Installment loans can have repayment plans between 6 months to 5 years. Kindly select your state of residence prior choosing your lender as availability depends on certain locations.

      It is worth mentioning to review the eligibility requirements and loan terms prior applying. Should you find the rates high, your alternative could be credit cards, as long as you have good credit.

      Hope this helps.

      Cheers,
      Jonathan

Go to site