Installment loans in Philadelphia – the Pros and Cons
The term, “installment loans in Philadelphia,” is widely used in the subprime, payday loan industry. It is the type of loan that requires a simple credit check, rarely no credit check, or property as collateral. Installment loans in Philadelphia are commonly a financial option for borrowers with poor credit.
The installment payday loan industry has been prevented in recent years from exploitation of financially irresponsible borrowers, many of whom had several payday and installment loans in Philadelphia going at the same time from several different lenders. This type of borrowing was financially self-destructive and left some borrowers in a debt spiral of no return.
Now installment loans in Philadelphia and regular two-week payday loans can only be taken out six times per year or less often, depending upon the particular state. This legislation has helped to pull the reins in a little on the payday loan industry.
Some payday lenders use the term “installment payday loans” to describe a two-week payday loan. Others use the same term to describe a no-credit-check, unsecured loan that can be paid back in bi-weekly payments for six months. The bi-weekly payment on a loan amount of $250.00 is $45.29. Note that bi-weekly means twice a week, not twice a month. The annual percentage rate (APR) on this loan is 378.96 percent.
There is a silver lining, however. The borrower is eligible to borrow increasingly larger sums of money at progressively smaller interest rates, the longer he or she continues to borrow from a lender. The highest amount that can be borrowed is in the neighborhood of $3,000.00 over 19 weeks at a bi-weekly payment rate of $119.29, which boasts an APR of 59.84 percent. This APR is not too much higher than a credit-card APR for a borrower with good credit.
To qualify for an installment payday loan, a borrower needs a regular job or fixed income of $1,000.00 to $1,500.00 depending upon the lender. He or she must be at least 18 years old, a U.S. citizen and have an active checking account. Most installment payday lenders will deduct loan payments directly from the borrower’s checking account at bi-weekly intervals.
Another type of payday installment loan is one that doesn’t have to be paid back for 45 days, as opposed to the 14-day payback time limit on a normal payday loan. For some payday lenders, this 45-day payback time is a smoke screen for a payday loan that the borrower renews every 15 days at a $15.00 fee for every $100.00 borrowed.
Translated, this means that if the borrower doesn’t have the $100.00 loan amount plus the $15.00 fee on the day that the loan becomes due, he or she can “renew” the loan twice (once every 15 days) at just the fee of $15.00 each time the loan is “renewed,” or in reality, rolled over.
The payday installment loan with the 45-day term is a much better deal. The borrower pays only one $15.00 fee and stretches the payments over 45 days. The interest rate on the 45-day term loan is 122%, as opposed to the 15-day, $15.00-fee renewal payday loan with an APR of 391%.