Home Blog Personal Loans vs. Payday Loans: Which Is Best For You?
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personal loans vs payday loans

Your car just broke down, and the mechanic told you it'd cost more than a week's paycheck to cover the repair cost. But all the money you'll get for this week and next week's pay has to go to bills. What should you do? 

If you live in Texas, Oklahoma, or Virginia, you have a few options at your disposal. Two of the most prominent solutions to your short-term financial needs are payday loans and personal loans. Atlas Credit is here to help you choose the borrowing option for your situation.

What Is a Payday Loan?

Think of a payday loan as more of a cash advance. It is a one-time borrow paid against money you know you will get in your paycheck. You can usually secure only a small amount — about $500 or less.

Payday loans come with some advantages. For instance, you can often obtain a payday loan without a credit check. The lender is less concerned with risk when offering small payday loans, so the approval parameters are lenient. 

Many borrowers with low or no credit lean toward payday loans, but there are drawbacks to be aware of. Many payday loans feature hidden fees and interest rates that trade your short-term financial struggle for long-term challenges. The fees for missing a payment are also high. What's more, payday loans have no positive impact on your credit score. In fact, the lender will only report the loan to credit bureaus if you miss a payment.

What Is a Personal Loan?

A personal loan is money you borrow from a lender and pay back over a more extended period, usually years. Personal loans tend to be larger than payday loans. You can often borrow thousands of dollars. Personal loans also offer longer terms, meaning you can disperse your payments over a longer period.

One aspect to keep in mind is that personal loans require approval. The lender will look at credit reports and other evidence to see if you are a reliable candidate for money lending.

While there are more steps to follow when obtaining a personal loan, the long-term benefits are worth your time. You will pay less in fees and accrue less interest with a personal loan than a payday loan. This way, you can navigate your immediate financial needs while remaining flexible in the future. 

The low interest rates available give personal loans versatility. Personal loans can be used to consolidate your credit card debt because they tend to charge lower interest rates than credit cards. Plus, some people even use personal loans to pay off their payday loan debt.

Additionally, your credit score can grow as you chip away at your balance. Each payment contributes to your long-term financial well-being. 

Should I Use a Personal Loan or a Payday Loan?

Ultimately, a personal loan is better for most borrowers than a payday loan — especially when you borrow from a lender that is willing to work around financial hardship. While payday loans provide quick access to a modest amount of money, personal loans offer more money and better terms.

Here are the reasons you should choose a personal loan over a payday loan: 

  • Repayment terms: Personal loans often offer much higher loan limits than your average payday loan. This is typically because personal loans can be paid off over a period of many months, while a payday loan is supposed to be paid back as soon as possible.
  • Interest rates: Payday loans are short-term loans with high interest rates. They're designed to bridge the gap between one payday and the next. That's why it's critical that you repay them by your next payday at most — if not, you could end up with a worse financial situation overall.
  • Qualification flexibility: To obtain either a payday loan or a personal loan, you'll be required to fill out an application to see if you qualify or not. Both payday loans and personal loans are forgiving of individuals with poor or bad credit scores, but personal loans are more forgiving in the long run.
  • Loan amount: Both payday loans and personal loans allow for small loans of as low as a few hundred dollars. Personal loans allow borrowers to qualify for sums of up to $1,400.

Personal Loans From Atlas Credit

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At Atlas Credit, we offer competitive personal loans with flexible qualifications and terms. Our borrowing options can help you navigate financial hardship and come out on top. 

We set ourselves apart through our fast application process and rapid decision-making. You can obtain a loan even if your credit history is spotty. Trust is the name of the game. We'll look for evidence of stability and willingness to repay the money you borrow. Then, we'll establish a long-term relationship based on your history with us and our interactions — not solely based on your credit score. 

Why Trust Us to Compare Personal Loans and Payday Loans?

The financial decisions you make today impact your future stability. It's important to do research and make your choices with reliable information in mind. Atlas Credit is an institution you can trust when weighing your options. 

We've helped hundreds of customers understand the differences between borrowing options like payday loans and personal loans. Each customer we serve has a unique circumstance, and we work hard to determine the ideal solution. Our first-hand experience has shown us the benefits of choosing a personal loan. From the outcomes we've helped our customers achieve to the personal stories they've shared, it's clear to us that personal loans are a competitive option.

As a financial institution that keeps your best interest in mind, we are here to provide useful insight. You can count on the information we share online and at dozens of neighborhood branches to lead you in the right direction.

Apply For a Personal Loan Online

Learn More With Atlas Credit

Ultimately, it's up to you to decide which loan option is best for you. But if you're leaning toward the benefits of a personal loan from a quality lender like Atlas Credit, consider applying online or in one of the many brick-and-mortar locations near you.

We can get you the money you need to solve your financial emergency or help you take care of any extra cost you need covered as soon as you're qualified! Apply now or contact Atlas Credit today to learn more about the personal loan process!

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