When you are in need of a loan you have two options available to you. You can apply for a traditional personal loan or you can get a payday loan. There are differences between the two and depending on the situation you are in will depend on which one is right for you.

A traditional personal loan is usually generated through a bank, credit union or lending company. These loans are approved based on your credit score, your employment and the ability to repay the loan over time. If you are new to a job, have poor credit and do not have a good history of credit repayment, you may not qualify for this type of loan. Personal loans are usually for amounts over one thousand dollars and may require collateral for you to receive the loan. A secured collateral loan is where you provide an item of value as assurance that you will repay the loan. Interest rates on these loans vary and the time it takes to process a loan could be anywhere from one day to a week.

A payday loan is done through a private lending company that gives you a loan for an amount of up to the total of your next paycheck. When you receive your next paycheck the loan company will need to be paid in full. If you can not pay the loan back at that time you can pay for an extension but this is not recommended. Extension costs and fees can add up quickly.

A payday loan is great to get you out of a minor financial situation. If you find yourself out of cash a few days before payday and your car breaks down this is a great way to get help. You can apply for a payday loan either online or in person at many storefronts around the country. The application process will require you to be at least eighteen, have a bank account and a valid job to receive a loan. Processing of these loans, depending on size, can be instantly or take up to one full day. If you apply online you may be required to have a phone interview so the company can confirm your information. Once approved the money is wired into your bank account.

A personal loan has installment payments that you pay over the course of one to five years. These equal monthly payments have a specific due date and as long as you make them on time you are fine. A payday loan however, is due anywhere from three to fourteen days after the loan is issued. The loan needs to be paid back in full and with interest at that time. There are no exceptions unless you pay penalties to renew. For this reason when you apply for a payday loan make sure you can afford to pay it back in the time allotted. When you apply for either type of loan make sure that you are always informed.