If you can’t afford the payment when your next payday comes around, that’s when a lender might offer you a “rollover.” A rollover allows you to just pay the initial borrowing fee until your next paycheck, but you’ll still be on the hook for the original loan balance plus the fee for the rollover amount. Since many payday borrowers end up rolling their balances over because they are unable to cover the full amount when it’s due, these fees can rapidly pile up. This makes it difficult to get out of the payday loan debt cycle.
A payday loan and a personal loan have some similarities. Both are unsecured loans, which means that unlike a mortgage or auto loan, they are not backed by any form of collateral. However there are a few important differences that you’ll want to be aware of.
Personal loans typically have terms of at least a year and up to several years. A payday loan has a shorter term. It’s common for payday loans to need to be repaid in a matter of weeks. Usually the full payment – interest and fees included – will be due on your next payday.
A payday loan is typically for a smaller amount – usually under $500. Personal loan borrowers typically seek much more cash. As of the first quarter of 2021, the average balance for a new personal loan was $5,213, according to TransUnion.
Personal loans are typically paid online monthly via direct deposit from a bank account. With a payday loan, if your check bounces or you can’t pay the full balance on the required payday, you may have to roll the loan over to the next payday, accruing more fees in the process.
There are a wide variety of personal loans, but most will have much lower interest rates than payday loans. Your interest rate will depend on the lender, the amount that you borrow and your credit score. Daha fazlasını oku