Before you start looking for a payday loan, you should stop and give consideration to getting a personal loan. There are certain advantages that a personal loan has over a payday loan, and you may find one to be a good fit with your personal finances.
Personal loans are easier to budget for
For most people, a payday loan is simply an advance on their next paycheck. But it is easy to forget about a future expenses, and you may not have enough money in your next paycheck to pay off your loan. If you contact the lender before the due date, they are likely to roll over the loan, but this makes the payday loan more expensive. With a personal loan, there is a single monthly payment that represents a much lower percentage of your paycheck; therefore there is less chance of falling behind and incurring additional fees and other charges.
Larger loans are available
Although the amount that you can borrow will vary from one payday lender to the next, it is almost always held to a certain percentage of your paycheck, and this will usually be a small percentage. With a personal loan, the money is financed for several months, so your ability to pay back the loan will be dependent upon your monthly income and, to a certain extent, your credit rating. This means the possibility of a larger loan. Payday loans are only for a couple of weeks, and your credit rating is often irrelevant. But the amount you receive in your weekly or bi-weekly paycheck will be the greatest factor in determining the upper limit of the loan.
You can build up your credit rating
Lenders who offer personal loans will usually report your on-time payments to at least one credit agency, so when you pay back the loan, you will be building up a good credit history. Payday lenders seldom report to a credit agency when you pay back a loan on time. This is mostly because it is a one shot deal. You borrow, then pay it all back in one lump-sum payment. Of course, if you fail to pay it back the cash advance, you will be reported to a credit agency, just like any other lender, but the thing to remember is that there is no upside to a payday loan when attempting to build up your credit.
Take the time to look for personal loans that are available to you, and compare them to a payday loan; you may be surprised at what you qualify for. There are many lenders that offer both payday and personal loans. Remember, personal loans are easily distinguished by installment payments versus a single payment.