Without ignoring these needs, many non-bank lenders decided to add installment loans to their regular offerings, while some focus exclusively on them and attract many loyal customers. As a result, there is considerable competition between individual companies, putting the customer in a comfortable position. They can compare many offers and choose the best one for themselves using a comparison website dedicated to this type of loan – moneystore.pl/pozyczka-online-na-raty. Installment loans can also be tailored to individual needs, so it is worth carefully analyzing all the “pros and cons”.
Convenience for the Borrower and the Lender
Repaying an installment loan over 1–2 years is now essentially standard, and some companies offer repayment periods of up to four years. By comparison, anyone choosing a payday loan must be aware that repayment will be required almost immediately, which may not be possible if the loan amount is high. PLN 1,000 or PLN 2,000 is not a small amount that can be obtained quickly and included in a budget without effort. The risk calculation is unfavorable in this case, which is why payday loans work best for relatively small amounts.
Importantly, most payday loans have a limit that cannot be exceeded, and amounts of several thousand zlotys will not be available through this type of loan for a long time yet. Of course, to borrow such an amount through an installment loan, the customer will undergo more thorough verification, but this is not something to worry about. In such a case, both the lender and the borrower can be more certain that the loan will be repaid and that the borrower will avoid unpleasant consequences. On the other hand, since an installment loan is not an unbearable burden, the borrower does not need as high a creditworthiness as in the case of a payday loan. It is also important that a non-bank installment loan is less restrictive than a bank loan, so many more people can use it.
An Installment Loan Is, Contrary to Appearances, a Smaller Burden
Of course, it is a fact that the costs of an installment loan are considerably higher compared with a payday loan. The lower the installment, the longer the financing period and, consequently, the higher the total costs. In the long run, however, these costs do not hit the budget all at once; instead, they are a relatively low expense that can easily be incorporated into the monthly budget. Admittedly, this is a commitment lasting several years, but it is easier to manage, especially since many loan companies allow borrowers to set the monthly installment themselves. There is also no need to worry that the loan process will be much longer than in the case of a payday loan. Customers undergo detailed verification in both cases, loan applications look the same, and they are analyzed by the same automated system.
Careful Household Budget Planning
Taking out an installment loan is usually considered and planned much more carefully and in greater detail than taking out a payday loan, which can easily be obtained—as its name suggests—in the heat of the moment or on impulse. For those repaying installments, limiting everyday routine expenses will not be as burdensome, especially since most households tend to leave themselves some financial margin when planning their budgets. This makes it possible to consciously spread out expenses, which is particularly important for customers struggling with financial problems who would be unable to manage a very large one-time expense.
Do Installment Loans Have Disadvantages?
Of course, this is an inherent element of every loan, a kind of non-financial cost. The disadvantage most often cited by customers is that no company will provide such a loan for free. This would be completely unprofitable for the lender, so it should not surprise anyone. There are, however, certain promotions, such as no costs for the first installment, a partial refund of costs for timely repayment, and so on. This is a certain convenience, especially since—as already mentioned—the costs of such a loan are considerable, although despite this and contrary to appearances, it provides greater safety and protection against falling into a debt spiral. Sometimes it is therefore worth bearing higher costs for stability, not only financial but also psychological.
Unfortunately, an installment loan also means a long-term reduction in creditworthiness. In the case of a payday loan, the commitment is short-term and leaves no lasting trace. An installment loan lasts several years, so all other loans, such as a mortgage, should be planned well in advance.