Personal loans vs. payday loans: pick the right loan and apply today

Both loans put money in your account quickly. The difference is how you pay it back: all at once from your next paycheck, or a little each month. Pick the shape that fits your budget, and the rest is easy.

Personal and payday loans: the basics

A payday loan is a short-term loan, usually $100 to $500, with a flat fee. You repay the amount plus the fee in one payment on your next payday, typically two to four weeks later. A personal loan, in this context a personal installment loan, is a larger unsecured loan, usually $500 to $5,000 online, repaid in equal monthly payments over several months to a few years, with interest charged by APR.

People often search for personal payday loans or payday personal loans because they want the speed of a payday loan with the flexibility of a personal loan. Online, you can get exactly that: one short form, a fast decision and, depending on the amount and your state, an offer for either a single-payment loan or monthly installments.

Personal loans vs. payday loans compared

How to apply for either loan

1. Start with the amount and the payment you want. Under $500 and repaid next payday points to a payday loan; more, or smaller payments, to a personal loan.
2. Fill in one form for both. Lenders offer the product that fits your amount, income and state.
3. Compare single-payment and monthly offers. Look at each payment and the total you will repay.
4. Choose, sign and get paid. Whichever loan you pick, the deposit normally lands one business day after signing.

When a payday loan makes sense

• You need $500 or less for a short gap.
• Your next paycheck can cover the amount plus the fee and still pay your bills.
• You want the simplest possible loan: one payment and done.
• You need the money quickly and have limited credit history.

See payday loans online for how they work.

When a personal loan makes sense

• You need more than $500.
• One big payment would leave you short for rent or groceries.
• You want a fixed payment and a clear payoff date over several months.
• You would like to build credit with a lender that reports payments.

Our installment loans page covers terms in depth, and small personal loans focuses on amounts under $2,000.

Which loan for which situation?

Cost compared: the same $500 both ways

Example terms; real offers vary by lender, profile and state.

Example

$1,000: payday-style vs. personal loan

$1,150Once, if a payday-style fee appliedvs$100.46× 12 at 36% APR

Most states do not allow $1,000 single-payment payday loans, and this example shows why a monthly plan is usually the realistic choice at this size.

Payday personal loans: the in-between option

Some lenders offer a hybrid: a payday-sized loan of $300 to $600 repaid in two to four installments over a couple of months. It is approved like a payday loan, mainly on income, but repaid like a small personal loan. If one payday payment is a stretch but you do not need a large loan, ask for this kind of schedule. In some states it is the standard format for short-term loans.

What is a personal payday advance?

A personal payday advance is another name for a payday loan or cash advance loan made to you as an individual, rather than through an employer program. You borrow against your next paycheck and repay on payday. Some lenders offer the same advance split into two or three payments. See cash advance loans for details.

Flat fees vs. APR: reading the price

Payday loans quote a flat fee, such as $15 per $100. Personal loans quote an APR, such as 36%. To compare them fairly, look at the total of payments, which every offer must show, and the APR, which every offer must also disclose. A $15 fee on a two-week loan works out to about 391% APR because it is annualized; the dollar cost is still $15 per $100. For longer needs, the personal loan's lower APR usually means a lower total.

Fees to watch for on both

Beyond the main cost, check for a few extras. Late fees apply on both types if a payment is missed. A returned payment can also bring a fee from your bank. Some personal loans charge an origination fee deducted from the amount you receive, which is included in the APR. Payday loans in some states can be renewed for another fee, which adds up quickly. Every offer must list these, so read the fee section before you sign.

Credit checks and approval

Payday lenders decide mostly on income and your checking account, and many skip a hard pull with the big three bureaus. Personal installment lenders also weigh income heavily, especially those serving bad credit, but may look more closely at your existing debts and may run a credit check before final approval on larger amounts. Either way, you can apply with any score; our bad credit loans and no credit check loans pages explain the checks in detail.

Speed: which is faster?

Both are fast online. Payday loans are approved slightly faster because there is less to verify, and many fund the same day for early weekday approvals. Personal loans usually fund the next business day; larger ones may need a pay stub or bank verification first. If timing is critical, apply early on a weekday morning. See same day loans.

Online vs. storefront for each type

Both payday and personal loans are available in stores in many states, but online is usually faster and more convenient. You apply from your phone at any hour, one request reaches several lenders, and the money goes straight to your bank. Stores can hand you cash, but you are limited to their hours and their single offer.

Can you have both at once?

It is possible, but rarely a good idea. Two loans mean two due dates and two sets of costs, and many states limit how many payday loans you can have open. If you need more than one loan would cover, it is usually better to request one personal loan for the full amount.

Which one builds credit?

Most payday lenders do not report on-time payments to the credit bureaus. Many personal installment lenders do, which means a personal loan repaid as agreed can help your score. If improving your credit is a goal, ask the lender whether it reports before you sign.

Which loan fits your income pattern?

If you are paid weekly or every two weeks and your paychecks are steady, a payday loan lines up neatly with your next check. If your income is monthly, such as Social Security or a pension, a single payment due two weeks out may land before your money does; a personal loan with a monthly payment date matched to your deposit is usually more comfortable. Gig workers with uneven weeks often prefer installments too, because a fixed monthly amount is easier to plan around than one large payment.

Repaying each type

Both are repaid automatically from your checking account. A payday loan is debited once on your due date, so keep the full amount available. A personal loan is debited monthly, so set the date just after your payday. With either loan, call the lender before the due date if something changes; payday lenders in many states must offer an extended payment plan, and installment lenders can often move a date.

State rules for personal and payday loans

State law decides which loans are available where you live. Most states allow payday loans up to $500 and personal installment loans above that. In Ohio and Virginia, even short loans come with an installment schedule by law. Others, like New York and Pennsylvania, do not have payday loans, so personal installment loans are the fast option. See the state rules table.

What you need for either loan

• Adulthood (18+) and U.S. residency.
• A dependable income, whether wages, benefits or your own business.
• An open checking account.
• Proof of identity, your SSN and working contact details.

After you apply

Lenders we work with see your request the moment you submit it. Depending on your amount and state, you may see a single-payment offer, an installment offer or both. Each shows the cost, dates and total. Pick the one that fits, or close them all at no cost to you.

Switching from payday to personal

If you have been using payday loans repeatedly, moving to a personal installment loan can lower the stress of a single big payment each month. Use the personal loan to pay off the payday balance, then make one predictable monthly payment. Compare the totals first so you know the switch saves money over the full term.

Ready to apply?

Choose an amount: a $500 loan, a $1,000 loan or a $2,000 loan, or start with payday loans online.