5 Practical Reasons to Seek a Personal Loan Rather Than a Payday Loan

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(Newswire.net — October 28, 2019) — Everyone needs some quick cash from time to time. It may be an unexpected repair to the car or some other event that’s not in the budget. As you look around for financing, there are several alternatives to consider. Personal loans and payday loans are sure to be options that you consider. Before jumping on the first likely offer, it pays to look closely at all of your payday loans alternative solutions, including personal loans. Here are some reasons why a personal loan may be a better choice. 

Personal Loans Come With Lower Interest Rates

One of the first things you’ll notice is that payday loans come with high interest rates. Even allowing for the short amount of time you have to repay the debt, the interest alone is a significant amount. It’s true that payday loans are fast, but you will pay a high price for that speed. 

By contrast, you could find that the interest rate on a personal loan is more competitive. In fact, the rate may be lower than the rate currently associated with a credit card account. Assuming that you qualify for a personal loan, it will end up costing you much less than the typical payday loan. 

Personal Loan Lenders Waste No Time Reviewing Applications

One of the benefits that payday loan lenders tout is that applications are reviewed and often approved quickly. That’s true in most cases, but don’t assume this type of loan is the only one that can be approved the same day. There are personal loan lenders who manage applications with the same rate of speed.

In fact, it’s possible to obtain an instant decision for a personal loan. This is true when you’re dealing with an online loan provider, but it’s also true with many brick and mortar lenders who offer this type of loan option. Even if you need the money as quickly as possible, don’t assume a payday loan is your only solution. 

The Repayment Schedule is Easier to Manage

Payday loans are fast, but repaying them can be difficult. The typical payday loan comes with terms that require debtors to repay the balance in full in a short period of time. In most cases, you will need to repay the debt in full somewhere between 14 and 30 days after securing the funds. Can you afford to repay the amount borrowed plus the interest by your next payday? Not everyone can manage that without significant difficulty. 

With a personal loan, you are likely to enjoy a longer term. Some personal loans allow debtors up to two years to repay the debt. This is done in a series of monthly payments that are a lot easier to fit into the budget. Owing to the more competitive interest rate, personal loans are likely to be a better choice than payday loans. That’s true even if even if you take the full two years to settle the loan balance. 

Many Personal Loan Lenders Report Your Prompt Payments

As long as you’re borrowing money, why not use the loan to increase your credit score by a few points? Most personal loan lenders report regularly to the major credit agencies. By making the payments on time, you could see your score increase by the time the obligation is settled in full.

Finding a payday loan lender who reports activity to the major agencies is difficult if not impossible. Most will readily admit that they don’t report anything to any agency. Why go this route when you can enjoy lower interest rates, more flexible repayment terms, and also add a few positive comments to your credit reports?

You Can Borrow More With a Personal Loan

Payday loans are designed to provide a limited amount of funds in a short period of time. That’s fine if you need to cover the costs of a minor car repair, but what if your situation requires more funds than the lender will provide? You’ll find that personal loan lenders will approve loans that are at least ten times the amount that the average payday loan lender is prepared to provide. Add in the ability to apply and potentially receive more funds with all of the other advantages, and the best choice quickly becomes apparent. 

Do you need money to cover an expense or to reorganize existing debt? Look closely at what a personal loan has to offer. There’s a good chance that this solution will accomplish everything you have in mind and provide a few additional perks.