There has been much discussion as to the viability of short-term cash advance or payday loans in the news over the past few years. Some have even called for their outright prohibition. However, critics of the popular credit choice are quick to admit that there is a real need for these payday and personal loans. In spite of the apparent need for short-term credit (especially in this economy, which lacks abundant credit) some pundits speculate that these cash advance loans are on their way out thanks to the recent election of Mr. Obama and some liberal democrats. So what is in the wing to replace this necessary short-term product? Many familiar with the payday advance industry suggest it may be installment loans.
Installment loans are a different lending product that gives consumers even greater repayment flexibility. Demorats could hardly call these loans “predatory,” although federal officials once gave their express blessing to truly predatory loan products such as subprime mortgages, HELOC loans, and other high dollar loans tied to housing products.
With these short-term installment loans, consumers can repay in full at any time prior to their loan’s stated maturity date - which they choose at the outset of the loan - or they can make a set number of payments (typically around 20) over a period of weeks, normally bi-weekly. Costs are affordable and give the consumer much more of a safety net if they are unable to pay their loan in full on the two-week maturity date most payday loans have. Short-term lending and the fees and interest associated with it isn’t going away… it’s definitely changing, but you can be assured that consumers will pay as much or more with installment loans.