What You Need to Know About Personal and Payday Loans

Payday Loans

Whether you are in the business for a loan right now or simply curious, look no further! We’ve assembled an easy-to-use guide for personal loans, including when it’s ideal for taking one out, how they different from a payday loan, and how to make sure you use both like a pro.

What is a personal loan?

Personal loans are loans with fixed monthly installments and a set time to pay them back. They’re usually taken from credit unions, banks, or, more commonly, online lenders. You’ll have a set interest rate and installments, which will be better if you have good credit. Most commonly, you won’t be able to get one at all if your credit is poor.

What is a payday loan?

Payday loans are created to be taken out over shorter periods than personal loans. This means they have a far higher interest rate, as you will be paying it back over a shorter period, and the lender still wants to make some cash from you. They are also more accessible for those of us with poor credit. For this reason, it’s critical to choose a vendor you can trust. If you’re taking a loan from paydayloanspro.com, or another reputable site, you’ll probably be fine. 

What are payday or personal loans good for?

It’s important to only go into debt with a clear goal and a clearer idea of how you will get out of it. For a longer-term personal loan, you could be consolidating other debts, renovating a vehicle or home, or financing a large purchase for which you can get a better rate than a credit card offers. Payday loans are offered as micro-loans intended to fill in gaps for rent or utilities if your boss suddenly changes shifts on you. You could use one to help you get a vehicle back on the road or cover an emergency. Neither are there to finance fun or splurge on treats. They’re certainly not smart to use for vacations or weddings, either.

While saving is usually the best way to create a healthy financial life, sometimes you just require more cash than you currently have to achieve a life-boosting goal. Why not try making some extra money online, or with extra shifts, before clicking on that loan? Only when you face a limited window of time with no way to save is it smart to think about taking on debt. These top tips from businessinsider.com will help you decide if your goal is a smart one.

When is it a wrong idea to use a personal or payday loan?

Now you know what you could use a loan for, let’s look at what you shouldn’t consider. Obviously, if you have another option that’s cheaper, skip the loan. There’s no need to take on debt for bad reasons. Pride is a bad reason for debt. If you own a willing family member who will help you get new snow tires guilt-free, it’s best to swallow your pride and accept the help before taking out a loan. 

It’s probably also a good idea to skip the loan if you have trouble managing debt. You need to make a repayment plan and stick to it to use payday or personal loans properly. For medical debt, try to exhaust other options first; the hospital itself and some medical-only financing institutions might be able to give you a more competitive rate than a standard loan. Here are some other tips specific to medical debt from npr.org that could help.

With this smart guide to personal and payday loans on your side, you’ll be able to make smarter financial decisions that build your dreams. Remember, it’s always better to save first rather than take on debt, but if you choose debt, make sure it’s smart and helps to achieve your goals.