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Payday Loans vs. Personal Loans: What's the Difference

Many people think that borrowing money is all about the amount; that it doesn’t matter where or how you get it. In truth, debt is not created equal. Different types of loans bear respective factors and points for consideration that a borrower needs to account for. The type of debt you incur can affect nearly every part of your repayment process.

If you’ve been thinking of applying for a loan to help with your financial obligations, then you’ve most likely spent your time analyzing factors such as interest rates and loan terms. Through your research, you will most likely have to decide between two loan programs: payday loans and personal loans.

The Popularity of Payday and Personal Loans

The current loan market has paved the way for dozens of different options available to aspiring borrowers of all kinds and all causes. Payday loans and personal loans have stood out because of the advantages they provide.

From typical borrowers looking to take care of everyday financial needs to those looking for assistance during emergencies, both options are certainly worth looking into. Currently, payday loans and personal loans have become staple options among all lending firms all across America, such as those partnered with When Ends Don’t Meet!

Telling Payday and Personal Loans Apart

Payday and personal loans are incredibly different, but many borrowers often confuse one for the other. To know what’s best for your needs, you should know the difference between the two.

Both types of loans were developed for specific financial needs, so you should look into both options carefully before choosing what’s best for you. To help you tell the two apart, we’ve put together this brief guide on both payday and personal loans:

Payday Loans

A payday loan—also known as a check loan or cash advance—is a short-term loan with a small maximum amount (around $500 or less) and hefty borrowing fees.

Payday loans are designed for those with poor credit and limited access to traditional debt products like personal loans and credit cards. They provide instant funding at the cost of an average of 400% APR. Through payday loans, borrowers repay the amount borrowed within a short period (30 days at most) along with all interest and fees.

Payday loans are attractive because they are relatively easy to acquire and apply for. Borrowers don’t have to fork over collateral or assets, and they require bare-minimum requirements such as:

  • Borrowers need to be 18 years old or older

  • Borrowers need to provide a valid form of ID

  • Borrowers need to have a bank account and provide proof of employment

Personal Loans

On the other hand, a personal loan is a form of financial assistance that can be taken out through a bank, credit union, or online lender.

Like payday loans, most personal loans are unsecured and not backed by any collateral. However, some lenders may offer lower interest rates in exchange for collateral. Personal loans are convenient and widely available, making them a desirable option for those who need cash for medical costs, car repairs, vacations, and large purchases.

Personal loan terms are often between two to seven years, with a principal range between $1,000 and $50,000. Interest rates vary between 4% to 36%. The borrower is free to borrow whatever amount they want and use these loans for any purpose!


While they may seem the same at first glance, personal and payday loans have respective advantages and key factors that any borrower should account for. If you find yourself in a situation where you need to choose between the two loan options, this guide is all you need!

Money doesn't have to be difficult to access, and fortunately, this is where When Ends Don't Meet can be of tremendous help. If you need some cash fast, fill out our information form (which can be found here) to start your application process ASAP!

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