Interest Installment loans have high interest rates, but payday loans tend to have higher rates.  Payment Payday loans are meant to be repaid in one lump sum, but installment loans are to be paid back in pre-set installments, for the duration of the term.  Term They are both short-term financial options, but payday lending requires repayment in a matter of weeks whereas installment loans are designed to be repaid in a matter of months.  Amount Generally, installment loans are for larger short-term cash amounts, whereas payday loans are small-dollar loans. Most states cap payday loans at $500-$1,000.