Personal Loans vs Payday Loans
Compare personal loans vs payday loans. Understand the key differences in rates, terms, and risks to make the best borrowing decision.
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Personal Loan
- Lower interest rates (6-36% APR)
- Longer repayment terms (12-72 months)
- Larger loan amounts available
- Builds credit history
- Fixed monthly payments
- May require credit check
- Approval can take 1-3 days
- Some require income verification
Best For:
Planned expenses, debt consolidation, home improvements, and larger purchases
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Payday Loan
- Fast approval (same day)
- No credit check required
- Simple application process
- Extremely high APR (300-500%+)
- Very short terms (2-4 weeks)
- Small amounts ($100-$1,000)
- Debt trap risk
- Doesn't build credit
Best For:
True emergencies only when no other options exist
Side-by-Side Comparison
| Feature | Personal Loan | Payday Loan |
|---|---|---|
| Typical APR | 6-36% | 300-500%+ |
| Loan Amount | $1,000-$50,000 | $100-$1,000 |
| Repayment Term | 12-72 months | 2-4 weeks |
| Credit Check | Yes (usually) | No |
| Approval Speed | 1-3 days | Same day |
| Builds Credit | Yes | No |
| Risk Level | Low-Medium | Very High |
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