Quick answer
A payday loan is usually repaid in one lump sum on your next payday, with fees that equal APRs near 400%. An installment loan is repaid in fixed monthly payments over months or years. Installment loans on our network run 5.99% to 35.99% APR. Over the same time, the installment loan is usually far cheaper.
Both are ways to borrow when cash is short. The structure is what makes one so much more expensive than the other.
Side by side
| Payday loan | Installment loan | |
|---|---|---|
| Typical amount | Generally $500 or less | Hundreds to thousands |
| Repayment | One lump sum on your next payday | Fixed monthly payments |
| Term | Typically 2 to 4 weeks | Months to years |
| Cost | $10 to $30 per $100 per loan | APR, 5.99% to 35.99% on our network |
| Credit reporting | Generally not reported | Often reported |
| Credit check | Generally no check with the nationwide bureaus | Usually yes |
A $500 example
| Option | What you pay |
|---|---|
| Payday loan at $15 per $100, repaid in 2 weeks | $75 in fees |
| Same payday loan rolled over for 12 weeks (6 fees) | $450 in fees, and you still owe $500 |
| Installment loan at 35.99% APR over 6 months | about $54 in interest, paid off |
Illustrations. Payday fee from the CFPB's typical example; installment figure is a standard amortized payment of about $92.30 a month.
Watch out for high-cost installment loans
The CFPB has studied payday installment loans, often online, that spread payments out but still carry very high APRs, sometimes with a large balloon payment at the end. Always compare APR and total cost.
Which to choose
- If you can repay in full on payday with no strain, a payday loan is still expensive, but short.
- If you need more than two weeks, an installment loan with a payment you can afford is usually the safer choice.
Learn more in how payday loans work and payday loan interest rates.
If you need more time than one paycheck, compare installment loans, which spread the cost over months with APRs on our network from 5.99% to 35.99%. Check eligibility there or call (800) 236-7761.
Payday, cash advance and title products are high-cost short-term credit. They are intended for short-term needs only and are not a long-term solution. This page does not match you for payday loans. Rates and examples are illustrations; a lender's written disclosure shows your actual terms, and approval is never guaranteed.
Frequently asked questions about payday loan vs installment loan: cost, terms and risk
Is an installment loan better than a payday loan?
For most people, yes. Fixed monthly payments are easier to fit into a budget than one lump sum, and APRs are usually much lower than a payday loan's.
Are there payday installment loans?
Yes. CFPB research describes high-cost payday installment loans, often online. Compare the APR, not just the payment.
Do installment loans help my credit?
Many installment lenders report payments to credit bureaus, so on-time payments can help. Payday loans generally are not reported, according to the CFPB.
Can I get an installment loan with bad credit?
Often, at a higher APR. Credit unions and secured loans are worth checking.
Sources
- CFPB: What is a payday loan? (accessed 2026-10-09)
- CFPB: What are the costs and fees for a payday loan? (accessed 2026-10-09)
- CFPB: Can taking out a payday loan help rebuild my credit? (accessed 2026-10-09)
- CFPB: Payday loans, auto title loans, and high-cost installment loans: highlights from CFPB research (2016) (accessed 2026-10-09)
- CFPB: What is the difference between a loan interest rate and the APR? (accessed 2026-10-09)
Last updated 2026-10-09. How we research and update pages.