Don't Use A Payday Loan or Installment Loan For A Phone

If you need money for a new phone we do not suggest getting an installment loan or a payday loan. Both these products are extremely expensive and should only be used for emergency situations.

If you really need a phone T -Mobile has many free phones without a contract. T-Mobile also uses a SIM chip so you can use your phone in many places outside of the United States.

We provide more information on installment or payday loans below.

Payday Loans

Payday loans do not require a strong credit history and can get money into our checking account very fast. They are based on your payday so even those with no credit and bad credit qualify for these loans. In exchange for this ease lenders charge you a lot. Banks, friends, credit cards, or family are a much better option.

Installment Loans

Installment loans are loans for individuals with poor or no credit that are paid back over 12 to 24 months. These loans are fairly easy to qualify for but are very expensive so are best used for expenses that can't be avoided and are necessary. These loans are unsecured and linked to your payday.

How do These Loans Work

Installment and payday loans are based on your pay check. Payments are directly deducted from you bank account on payday. It's like the opposite of direct deposit. So when your payment is due the lender automaticallys deduct your payment from your account. Payday loan generally cost $10 to $45 per $100. These guys are very expensive which is why we say if you want a phone to use a payday loan. Anyway one you are approved for a loan the payday lender will ACH money to your checking account generally overnight. Then payment is due the next payday. If you have enough money to make full payment then the loan is paid off and you are done. If you don't have enough money in your account the lender will withdraw as much as they can and then continue trying to withdraw money. They will also charge you additional fees. This whole process can be a disaster for you as both you bank and your lender will be charging fees for not having enough money in your account. In the end the small loan you borrowed will cast 5x the amount in fees so avoid this situation.

Vicious Debt Cycle

Taking out too many installment loans or payday loans can lead to a vicious debt cycle. If you keep on borrowing money to make payments or because you don't have enough you will continue to pay more and more fees. You will actualy end up paying fees on your fees which is really just dumb. Instead avoid these loans and wait to get your phone or try one of the cheaper free phones. Again installment loans or payday loans are best for emergency situation like medical bills or a car payment that you must make in order to get to a job. And if you do take an installment loan or payday loan make sure you have a clear approach for paying it off. In other words make sure you can set aside each pay period to make the loan payments otherwise you risk falling into a disasterous debt cycle.

What's the Difference Between Direct Lenders And Matching Service

If you do a search for "quick money" or "bad credit loans" you will find a lot of sites offering you money. Most of these sites are not lenders. Instead they are what is called a matching service. You can tell if one of these sites is a matching service by looking at the disclaimers at the bottom. They will all say something like "the owner of this site is NOT A LENDER..." This means they are a matching service with means they will take your application and then your information to installment lenders and payday loan lenders in their network. These lenders will then ping them back a yes or now and a fee amount. The matching service will then send you to the lenders site and the lender will pay the matching service a fee. Matching services are not bad but you should know what you are getting into. They often deal with unlicensed lenders. Working behind a matching service makes it very difficult for regulators to find them. You can always say no even once you are matched but you will need to read all the fine print to understand what is what with your loan. If you must take one of these loans it's probably best to with a direct lender who is state licensed.

What is Better: Installment Loans Or Payday Loans

The difference between an installment loan and a payday loans is that the payments for installment loans are spread out over time. Having the payments due over time reduces the payment amount and APR but it does increase the total amount of fees compared to a payday loan paid on time. The key point here is that the payday loan is paid on time. If you are unable to pay payday loan on time then installments are almost always the better choice. Installment loans also increase the likelihood that you'll be able to afford the monthly payments. Again we do not recommend either of these products for getting a cell phone.