Bears Lending
A payday loan is one lump sum, one fee, one payment on your next payday. An installment loan is a larger amount repaid in equal monthly payments with interest accruing daily. Same lender, same stores — different structure, and the structure is what decides the cost.
The two loans, side by side
| Payday loan (FL) | Installment loan | |
|---|---|---|
| Amount | $200 – $500 | $500 – $5,000 |
| Cost basis | $10 per $100 + $4, fixed | 89% APR, accrues daily |
| Term | 7 – 31 days | 3 – 24 months |
| Credit check | None | Soft inquiry |
| Pay early | Allowed, fee doesn't shrink | Allowed, interest stops |
Two weeks: payday wins
Borrow $500 on the 1st, repay on the 15th. Payday: $54 fee. Installment at 89% APR: about $17 of interest for 14 days — but installment loans have a 3-month minimum term, so you'd pay off early. Interest to date: roughly $17. On paper the installment loan is cheaper even here; in practice, most $500 installment loans have a minimum finance charge that brings the two close. Call it a wash, with payday slightly simpler.
Three months: installment wins clearly
Now suppose you can't repay in two weeks and need three months. The payday loan has to be paid off and re-taken (Florida) or rolled once and then paid (Alabama). Six two-week cycles at $54 each is $324 in fees — and you still owe the $500 at the end.
A $500 installment loan over 3 months at 89% APR: three payments of about $190, total interest about $68. The loan is gone.
| Over 3 months | Payday (re-taken 6×) | Installment (3 mo) |
|---|---|---|
| Fees / interest | $324 | $68 |
| Balance at end | $500 still owed | $0 |
| Total cost of the $500 | $824 | $568 |
Twelve months: it isn't close
Twenty-six payday cycles: $1,404 in fees, $500 still owed. A 12-month installment loan on $500: about $272 in interest, paid off. The gap is over $1,100.
Roughly one pay cycle. If you are certain you can repay in full on payday, a payday loan is fine. If there's any chance you'll need a second cycle, the installment loan is cheaper — and the gap widens every month.
What the credit check means
Payday loans have no credit check, which matters if you have no bank history or a very recent bankruptcy. Installment loans use a soft inquiry — invisible to other lenders, no effect on your score — and are approved on income. Nearly everyone who qualifies for a payday loan qualifies for an installment loan.
How to choose
- Need it for one paycheck and you're sure → payday.
- Need it for a month or more → installment.
- Need more than $500 → installment (payday is capped by law).
- Already carrying a payday loan → an installment or consolidation loan to end the cycle.
Questions
Can I convert a payday loan to an installment loan?
Yes. Bears Lending can refinance an open payday balance into an installment loan at any store; a debt consolidation loan can fold in several balances at once.
Is an installment loan reported to credit bureaus?
Yes, monthly. Payday loans are not, unless they default and go to collection.
Why is the installment APR 89% if it's the cheaper loan?
APR is an annual rate; the payday loan's equivalent is 281–456%. Both are high because both are small, short and unsecured. Over any period longer than two weeks the 89% loan costs far less in dollars.