In many cases where people are looking for financial assistance in the form of a short-term loan there will be a choice to make between a payday loan that is repaid in full within a month of taking out the loan, or a longer instalment loan which can be paid over several months. Both provide short-term assistance at a time where the applicant needs some help with cashflow, but there are some differences to consider once you get past this.

The first thing to consider is that if you take out a payday loan you will have access to a smaller amount of cash than with an instalment loan. This averages at around £100 for most borrowers. Now, one of the potential problems that you might face is that from the time of you taking out the loan, and before the date you are meant to repay the payday loan in full, what happens if you lose your job, suffer an accident that leaves you unable to work, or you have other financial difficulties appear that were completely unexpected? With a payday loan you will have a legal obligation to meet that payment deadline.

With an instalment loan you have the benefit of taking out a larger amount of money if you need to, but more than that there is a greater level of flexibility when it comes to repayment terms. The modern breed of responsible short-term loan lenders provides easy access to loan calculators and online application processes. Find a lender that you can trust and that demonstrates that they offer this level of flexibility to their customers. Look at the online calculator and play about with the figures. The majority of instalment short-term loans are between a value of £100 and £1000. You should have a choice then to make repayment of the loan over the course of a single month (which is a payday loan), or up to 6-months in most cases. As you change the amount borrowed and the length of the repayment window you’ll be given a new total figure to repay. This figure includes the specific interest attached to the amount and repayment length.

Always choose to borrow money from an instalment loan provider that demonstrates a clear and transparent process from start to finish. You should have an explicit description of the amounts to pay back each month, including the dates to make payment by, and the ability to set up a direct debit to make things as simple and straightforward as possible. You should have a decision within minutes on your instalment loan application, with the funds directly transferred to your bank within 24-hours at the most.

Work out your outgoings and incomings for the coming months and write down exactly how much money you need to borrow and what you need to borrow the money for. From there you can make a choice between an instalment loan and a payday loan, each with benefits to explore. If you want greater flexibility of repayment terms and a slightly larger initial amount, an instalment loan is probably the better choice for you.