People also ask
Is a payday loan a revolving line of credit?
A payday loan is an installment loan and not a revolving line. It works similar to any type of installment credit where you鈥檙e paid a lump sum, and you have to pay the amount back by a specific due date. A payday loan is a short-term loan that is paid off when you get your next paycheck.
What is the difference between installment loans and revolving loans?
While installment loans let people borrow a pre-set amount, revolving loans let people borrow money as they need it. Credit cards are the most common examples of revolving loans. Home equity lines of credit (HELOC) are also common. With a revolving loan, a borrower usually has a credit limit, such as $1,000 or $10,000.
Is a payday loan an installment loan?
Payday loans are also not installment loans because they are usually paid back in one lump sum as opposed to multiple payments over time. However, some lenders may offer repayment plans that allow borrowers to repay their payday loan in more than one payment.
How do payday loans work?
With a payday loan, you must pay back the entire loan within the time allotted, and if you want to borrow more, you must apply for another loan. Payday loans are also not installment loans because they are usually paid back in one lump sum as opposed to multiple payments over time.