Many customers have used payday loans online recently. Typical uses of this product are for short term emergencies that come up in everyday life. At Axis Advance, payday loans online are NOT a product that we use to lend to our customers but instead an installment loan product with a set beginning and end payment with a clear communication on how much your loan will cost if not paid off early. Axis Advance installment loans are simple interest which is very similar to how car loans work. As with most lending products, if you pay extra and pay off early, you tyipcally save a lot of money on interest owed.
Payday Loans Online Not As Good?
This type of loan shows you that for a couple weeks you can borrow “X” and you will only owe “X” per $100 borrowed. So let’s say for example purposes you take out a $500 payday loan and that company charges you $25 per every $100 borrowed. 5 times $25 equals $125 fee to borrow. Total loan amount to repay in a couple weeks would be $625 to call it good. Sounds pretty straight forward and fair depending the nature of your request.
Here is where things can go wrong…
They will allow you to “rollover” that $500 for another $125 fee if you are unable to make the FULL payment. In your mind… if in a bind… you say “hey, I have to do this to not be late so I will do this.”. They allow you to only pay the $125 verse the full amount to cover the fee for borrowing. This keeps your account in good standing so far. Now, you are still on the hook for $500 + $125 (new fee for next pay cycle). Until you make a drastic step such as paying more than your loan fee, you are going to keep occuring the $25 per hundred fee until you can make a larger lump sum payment to knock it down. Over time you can see how this can be stressful because most people are unable to understand the full impact this can have on their finances.
Installment Loans Are Better Than Payday Loans
Where an installment loan would be better than a payday loan is the sheer simple fact that your TRUE cost of borrowing is disclosed up front in a form of a Truth In Lending Statement along with an amortization schedule. It will display your first all the way to your last payment based upon the repayment schedule you have selected. The best part is you can clearly see what the total cost can be. Such as when you purchase a car with a car loan, they show you the amount you financed, cost of interest, and what the two put together will equal ASSUMING you do not pay off early or extra towards principal.
Great installment loan companies such as Axis Advance (yes, we are bias because we go the extra mile to help explain), will verify all your loan application information and clearly explain your loan terms. We will even encourage you to pay your loan off as soon as possible because it is a simple interest loan. The less amount of days you keep the loan open, the less amount of interest you will have to repay. That is very clear and to your advantage. As required by law, we disclose the worse case scenario if you make all your schedule payments from start to finish. As with any loan, we also encourage financial responsibility and consideration in every scenario.
If you are considering a payday loan over an installment loan, take in consideration all facets in your decision.Apply Now