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Personal loans

Perhaps your car broke down and you need the money to get it fixed. Or maybe your child broke his leg and you have a pile of hospital bills. Whatever the reason, you need extra funds to cover your expenses. But with so many loan products on the market, how do you choose which is the best for you? Find out the difference between personal loans and payday loans to determine which best suits your short-term financial needs.

Personal Loans
Personal loans are generally obtained through financial institutions like banks and credit unions, though there are many online lenders available, too. These loans offer a fixed interest rate with a set repayment period, usually lasting one year or more. Lenders perform a full-scale credit check with the major credit bureaus when you apply, negatively impacting your score with each loan application.

Credit score affects the interest rate
Your credit score also affects your interest rate, so the higher your score, the better rate you’ll receive. However, if you default on your loan, the major credit bureaus are quickly notified of your delinquency. For borrowers with strong credit and the ability to repay their debt, a personal loan may be a good option.

Best Personal loans (2019)

Personal loans are larger loans up to $35,000 with repayment terms up to 6 years. A good option when you need to consolidate debt, or just need longer repayment time.

Your state:
Business Amount Payout Repayment Terms Cost of Credit States Facts
Min: $500
Max: $35,000
In some cases next day deposit 3 mth to 6 yr APR Interest: 5.99% - 35.99%
50 Bank, Installment, P2P and Unsecured loans
Required age: 18+
Regular source of income, required
Founded 1998
Loan connector
Min: $1,000
Max: $25,000
In some cases next day deposit 6 mth to 15 yr APR Interest: 8% - 135%
50 Required age: 18+
Founded 2011
Loan connector
Min: $1,000
Max: $5,000
In some cases next day deposit Up to 1 yr APR Interest: 7% - 36%
45 Installment Loans
Required age: 18+
Regular source of income, required
Founded 2012
Loan connector

Some of the featured links on this site are affiliate links. We may receive some compensation for those links. Amounts and costs might vary for different states.

Personal Loans vs. Payday Loans

Unlike personal loans, payday loans have a set fee for the amount borrowed, typically around $15 for every $100. The loan repayment period is also much shorter, usually lasting two weeks. Rather than consulting the major credit reporting agencies, payday lenders instead check your credit with a specialty bureau, which does not affect your credit score.

The loan itself also does not affect your credit score (positively or negatively) unless you default and the loan is sold to a debt collection agency. If you are building up your credit score and just need a quick advance for a couple of weeks, consider applying for a payday loan.

There are always pros and cons to each type of loan available. Shop around with lenders of both types to see the kind of rates you are eligible for. To help get personalized offers without filling out an actual application, get a free credit score check to use as a reference when negotiating with lenders.

Valerie Mellema

Valerie Mellema
Author & writer

Article writer

Valerie is an adept writer with over 10 years of experience as a journalist. Her official launch into the journalism profession was as an Associate Editor for the College newspaper published in the Tulsa community. She has authored many books/guides. She has a degree from the West Texas A&M University. You can connect with Valerie on LinkedIn Read more about us »

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