The Washington payday vs installment loans comparison has a trap in it that catches Spokane borrowers constantly, and it is not about rates. An installment loan is a product you apply for and pay for. An installment plan is a statutory right you are owed for free. The names are almost identical and the two are routinely confused, including by people trying to help.
Quick answer: An instalment loan is a credit product repaid over months from a licensed lender. Washington’s statutory installment plan under RCW 31.45.084 is a free right to convert an existing small loan into scheduled payments, which a licensee must offer on request and cannot charge for.
The product
An instalment loan is money borrowed and repaid in fixed scheduled payments across months, with each payment covering part of the principal and part of the interest.
You apply for it, you are underwritten for it, and you pay interest on it. In Washington these come from banks, credit unions and licensed consumer lenders, and they are not limited by the $700 small loan ceiling.
The structural advantage is that the payment is sized against a month rather than against a single deposit, which removes the failure mode that makes short-term borrowing risky. The corresponding cost is that it reports to the credit bureaus, so a missed payment is visible for years.
The right
Washington’s statutory installment plan is something else entirely. It is not a loan and you do not apply for it.
Under RCW 31.45.084, if you already have a small loan you may request that it be repaid under an installment plan, and a licensee must provide one. No fee may be charged for it. You are not borrowing anything further; you are restructuring what you already owe, at no cost.
Because no fee is charged, there is no APR to calculate on it. It is one of the cleanest borrower protections in American small-dollar lending, and it is badly underused because most people have never been told it exists.
What the plan costs you elsewhere
Free is not the same as consequence-free, and the trade is worth understanding before you elect it.
While you are in a statutory installment plan, a licensee may not make you a new small loan until the plan is paid in full or two years have passed from its origination, whichever comes first.
That is a deliberate closing of the door. The plan exists to end a cycle rather than to pause one. If your situation is a genuine one-off, it costs nothing and solves it. If you were counting on borrowing again next month, it removes that — which is uncomfortable and is usually the right outcome.
Choosing between the two products
Set the actual loan products side by side and the comparison is straightforward.
| Washington small loan | Instalment loan | |
|---|---|---|
| Maximum | $700 or 30% of gross monthly income | Set by the lender |
| Term | Up to 45 days | Months |
| Cost | 15% of first $500, 10% above | Interest over the term |
| Underwriting | Income and an account | Credit and income |
| Credit reporting | Generally none | Yes |
Per dollar borrowed the instalment loan is almost always cheaper. The small loan competes on who it will serve and how fast, which is a real advantage when the deadline is tonight and a poor reason to choose it otherwise.
Which one fits which problem
Three situations, three answers.
- A few days before a deposit you are confident about. A capped small loan is a defensible bridge, and Washington gives you a free extension and a free plan if the date slips.
- A cost larger than a month’s slack. An instalment loan, because a 45-day product cannot absorb it.
- An existing small loan you cannot repay. Neither — request the statutory installment plan before the due date.
The third case is where most of the money is lost in Spokane, because borrowers reach for a second product when a free right was already available to them.
It is worth naming why that happens. A borrower who cannot repay feels like somebody who needs more money, and the statutory plan does not look like money — it looks like admitting a problem to the lender. In Washington that instinct is expensive and exactly backwards: the plan is free, the second loan is not, and the plan is a right you are owed rather than a concession you are asking for.
How to tell which one you are being offered
Marketing language blurs the two constantly, so read the agreement rather than the sign. Four questions settle it.
- Is anything being advanced to me now? If yes, it is a loan. The statutory plan advances nothing; it reschedules what you already owe.
- Is there a fee or interest? A loan has one. The statutory plan may not carry either.
- How much, and over how long? Above $700, or beyond 45 days, it is not a Washington small loan at all.
- Will this report to the credit bureaus? Instalment lending normally does; small loan lending normally does not.
If a licensee offers you what it calls an instalment arrangement on an existing small loan and attaches a charge to it, that is the point to ask directly whether you are being given the statutory plan under RCW 31.45.084, for which no fee may be charged.
Asking for the plan properly
There is no form to hunt down and no hardship case to argue.
Contact the licensee before the due date and say plainly that you are requesting the installment plan under RCW 31.45.084. Ask for the schedule in writing — the amounts and the dates — and confirm that no fee is being charged, because none may be.
Naming the section changes the conversation. It signals that you know this is a statutory right rather than a favour, and it is usually enough on its own. If it is refused, ask for the refusal in writing and take it to the Department of Financial Institutions.
Do it in writing wherever you can. A licensee explaining in writing why it will not honour a statutory right is producing the exact document a regulator wants to see, and most of these conversations resolve at the moment you ask for the refusal on paper.
Frequently asked questions
An instalment loan is a credit product you apply and pay interest for. Washington’s installment plan is a free statutory right to repay an existing small loan in scheduled payments.
No. Under RCW 31.45.084 a licensee must provide one on request and no fee may be charged for it, which is why no APR is calculated on it.
No. A licensee may not make you a new small loan until the plan is paid in full or two years have passed from its origination, whichever comes first.
Per dollar borrowed, almost always, and it is repaid on a schedule rather than in one movement. It also reports to the credit bureaus, which cuts both ways.
Up to $700 or 30% of your gross monthly income, whichever is lower, measured across all licensees at once.
This article is educational and is not financial or legal advice. Before you borrow, confirm the lender is licensed with the Washington State Department of Financial Institutions (DFI), and read the fee disclosure in full.