Something Borrowed: Instalment and Payday Loans

February 10, 2021

Certain events can happen in life that you can’t manage on your own. Some of these situations may require you to borrow money to help mend the situation. Fortunately, in most cases, you can turn to your friends, family, a credit card, your employer, banks, or other financial institutions for help. 

This is relatively easy for people who have a fantastic credit score, but for people with no credit or poor credit, they are only presented with limited options to choose from. For people in this kind of situation, dealing with an emergency expense can be quite challenging. 

Thankfully, there are financial options for people stuck in this predicament, such as instalment loans and payday loans. And if you’re from South Africa, you’d be happy to know that Hoopla Loans offers quick, online payday loans so you can manage your finances quickly. 

Learning the differences between an instalment loan and payday loan is essential as it can help you compare options and determine which load is best for you. 

Instalment Loans

When you have an instalment loan, you repay a financial institution with fixed and regular payments over a predetermined term. Most financial establishments offer these loans, such as banks, credit unions, and online lenders. In some cases, instalment loans will have specific names, depending on what type of financial assistance they offer, like student loans, auto loans, personal loans, and more. 

Some of the characteristics of instalment loans are as follows:

  • You receive a chunk of your loan amount;
  • You can make a fixed periodic payment and pay portions of each payment;
  • Your account will close once you’ve settled the loan in full.

Fixed-Rate Loans and Variable-Rate Loans

Instalment loans offer two types of rates to choose from:

  • Fixed-Rate Loans: With this type of loan, you immediately lock in your interest rate after taking the loan. 
  • Variable-Rate Loans: This type of loan often starts with a low-interest rate; however, the rate may increase over time. 

It’s good to keep in mind that, although variable-rate may save you some cash, it could be the riskier choice in the long run. So, if you’re aiming for certainty, a fixed-rate loan is best for you.

Payday Loans

If you need financial assistance but don’t have credit or you’re working to improve your credit, payday loans are the perfect option for you. The great thing about payday loans is that you can get short-term, high-rate loans for as short as 31 days or fewer. On average, the annual percentage rate is 400% to 520%

When you take a payday loan, you allow a lender to have access to a post-dated check or your bank account. And at the end of your term, the lender can withdraw the money from your account. Additionally, what makes this type of loan different from an instalment loan is that payday loans charge a fee instead of interest. 

How Can I Qualify for a Payday Loan?

If you’re thinking of getting a payday loan, you should know that each lender will have different requirements. Most payday loan applications may not involve a credit check; however, other conditions include being at least 18-years-old, having a steady job or income, and have no history of bankruptcy. 

Fortunately, you can apply for a quick, online payday loan in South Africa, through Hoopla Loans. It’s 100% free to apply, we offer low repayments, and you won’t have to worry about your bad credit score

The Bottom Line: Knowing the Difference Between an Instalment Loan and Payday Loan Will Help You Find the Best Financial Solution

Anything finance-related can be quite tricky, but now that you understand the difference between these two loans, you’ll be able to figure out the next steps to help you handle your financial situation. 

How Can Hoopla Loans Help You?

If you’re looking for quick, online payday loans in South Africa, Hoopla Loans is exactly what you’re looking for.

Our company is one of the fastest-growing online loan brokers, offering secure payday loans, personal loans, medium-term loans, and long-term loans, all of which have flexible payment terms and competitive interest rates. Get an approval today