Can you have a payday loan and installment loan at the same time?

However, you may be able eligible to qualify for another loan, such as a Title Loan or Payday Loan in addition to having an open Installment Loan.

What are the 3 most common types of installment loans?

Here are some of the most common types of installment loans:.

What is another name for a payday loan?

These loans usually come with high fees and interest charges. Payday loans are also known by other names, including cash advance loans and check loans.

Do installment loans hurt your credit?

Installment loans can hurt your credit score if you do not pay on time, since the lender will report negative information to the credit bureaus. The hard inquiry into your credit history and the increase to your overall debt load when you first get an installment loan may also hurt your credit score initially.

Is an installment loan the same as a payday loan?

There are key differences between payday loans and installment loans, especially when it comes to annual percentage rates (APRs), loan terms and loan amounts. Overall, an installment loan has lower APRs, longer loan terms and larger loan amounts than a payday loan.

Table of Contents Show

Payday loan vs installment loan features
Payday loan vs installment loan: $700 example
Compare payday loans
Compare installment loans
How to choose between a payday loan and installment loan
What do I need to apply for a payday loan vs installment loan?
Bottom line
Frequently asked questions
Can you have a payday loan and installment loan at the same time?
What are the 3 most common types of installment loans?
What is another name for a payday loan?
Do installment loans hurt your credit?

Understanding installment loans

An installment loan is a specific amount of money you borrow and pay back in installments with interest over a period of time. Technically, loans such as mortgages and car loans are installment loans, but in the comparison below, the “installment loan” we are referring to is a personal loan offered by alternative lenders to borrowers with bad credit.

Traditional lenders like banks and credit unions also offer installment loans, but since their loans are for borrowers with good credit, we will not compare them with payday loans here.

Payday loan vs installment loan features

Loan amount

$100 to $1,500$500 to $15,000Loan termBy your next payday, up to 62 days6 months to 5 yearsAnnual percentage rate more info buttonOver 300% (borrowing fee is $15 to $25 for every $100 borrowed)18% to 47%Turnaround timeWithin a few hoursWithin 24 to 48 hoursEligibility requirementsFlexible – accepts bad credit and non-employment incomeLess flexible – has credit score and income requirements

Payday loan vs installment loan: $700 example

Let’s say a borrower in Ontario is debating between a $700 payday loan and $700 installment loan. Here’s how the cost can break down.

Loan amount

$700$700Borrowing cost$15 per $100 borrowed = $105 (497.73% APR)46.93% APRLoan term11 days6 monthsPayment amountOne full payment of $805$133.15 monthly for 6 months (98.88 in total interest)Total loan cost$805$798.88

If you’re looking at the dollar amounts, the installment loan is nearly as expensive as the payday loan. The key difference here is the loan term. An installment loan allows you to spread out your payments over several months. But watch out for longer loan terms, because if the loan term becomes too long, you may end up paying more in interest than a payday loan.

⚠️ Warning: Be cautious with payday loans

Payday loans are expensive. If you're experiencing financial hardship call Credit Counselling Canada for free financial counselling (Monday-Friday 8:00am-5:00pm at +1 866-398-5999). Consider payday loan alternatives:

Visit 211.ca. A free and confidential service that connects you to organizations that can help with finances, food, housing and more.
Debt relief companies. There are services to help you reduce your debt payments.
Payment extensions. Talk with bill providers about longer payment plans or due-date extensions.
Side jobs. Sell unwanted items online, sign up for food delivery and more.

Compare payday loans

Maximum borrowing costs per province

Always refer to your contract for exact repayment amounts and costs as they may vary from our results.ProvinceMaximum allowable cost of borrowingAlberta, British Columbia, New Brunswick, Ontario & Prince Edward Island$15 per $100 borrowedManitoba, Saskatchewan & Nova Scotia$17 per $100 borrowedNewfoundland and Labrador$21 per $100 borrowedNorthwest Territories, Nunavut & the YukonUp to $60 per $100 borrowedQuebecLimit of 35% annual interest rate (AIR)

Compare installment loans

How to choose between a payday loan and installment loan

Both are high-interest loans. Generally, a payday loan should only be a last resort because of its extremely high interest rates and short repayment terms. When making a decision, ask yourself the following questions:

Can I afford to repay the loan within the loan term? Payments for both payday loans and installment loans will be automatically deducted from your bank account. If you don’t have enough money in it on the due date, you will be charged fees. Make sure you have an exit strategy before taking out a payday loan or installment loan.
How much do I need? Payday loans max out at $1,500 (or less depending on your net income).
Do you want to pay off the loan in 1 lump sum? Some people prefer to pay off the loan in 1 lump sum rather than stretching it out over months. Payday loans offer that option.
How fast do you need the funds? It’s possible to get a payday loan within a few hours. Installment loans take around 1 to 2 business days.

What do I need to apply for a payday loan vs installment loan?

Payday loans

Be the age of majority. You need to be at least 18 years old (19 in some provinces and territories).
Steady source of income. Many payday lenders can accept non-employment income such as Canada child benefit, employment insurance, disability and social assistance. Learn more about payday loans for government benefits.
Valid bank account. You’ll need to provide a voided cheque or fill out a pre-authorized debit form.

Before taking out a payday loan, become familiar with the payday loan regulations of your province.

Installment loans

Be the age of majority. You need to be at least 18 years old (19 in some provinces and territories).
Steady source of employment income. Although there are some lenders that accept non-employment income, many require employment income.
Meet the minimum credit score. This varies widely among lenders. Some lenders accept a credit score in the 300s or 400s, while others start in the 500s.
Valid bank account. You’ll need to provide a voided cheque or fill out a pre-authorized debit form.

Bottom line

Payday loans and installment loans from alternative lenders are both high-cost loans that are accessible to borrowers who don’t qualify for traditional loans from banks and credit unions. Before taking out a payday loan or installment loan, compare your options, understand the true cost of the loan and have a concrete plan to repay it.

Frequently asked questions

Is an installment loan or payday loan better?
A payday loan has very short loan terms with annual percentage rates (APRs) in the triple digits. It is an extremely expensive loan and should only be a last resort.
Are installment loans the same as payday loans?
No, installment loans are a different product. They have longer loan terms, bigger loan amounts and lower APRs than payday loans.

Can you have a payday loan and installment loan at the same time?

However, you may be able eligible to qualify for another loan, such as a Title Loan or Payday Loan in addition to having an open Installment Loan.

What are the 3 most common types of installment loans?

Here are some of the most common types of installment loans:.

Auto Loans. Auto loans can help you pay for a new or used car. ... .

Mortgages. A mortgage is used to buy a house and is secured by the house. ... .

Student Loans. ... .

Personal Loans. ... .

Buy-Now, Pay-Later Loans..

What is another name for a payday loan?

These loans usually come with high fees and interest charges. Payday loans are also known by other names, including cash advance loans and check loans.

Do installment loans hurt your credit?

Installment loans can hurt your credit score if you do not pay on time, since the lender will report negative information to the credit bureaus. The hard inquiry into your credit history and the increase to your overall debt load when you first get an installment loan may also hurt your credit score initially.