In today's time, the financial needs of the people are changing rapidly. In such a situation, many types of loan options are coming up. Two of these important options are, the first is Personal Loan and the second is Pay Day Loan. Both have different features and are also used in different situations. In such a situation, it is very important to understand what is the difference between these two loans and which loan will be right to take in which situation. Let's know what is the difference between personal and payday loan?

The biggest difference between personal loan and payday loan is its amount. In personal loan, you can take a big amount, but in payday loan, you are given a small amount till the next salary comes, so that you can meet some small necessary expenses. This loan is available only till the salary cycle, that is why its name is also payday i.e. the day of payment.

Personal loans are given for a period of 6 months to 5 years or in some cases even more, while payday loans are usually given for a period of a month.

The interest rate of a personal loan is low in the long term, which can be from 10 percent to 26 percent. On the other hand, the interest and fees on payday loans are very high, especially if the loan is not repaid on time. You may have to pay up to 100 percent charge in many cases.

Personal loans are usually for marriage, education, treatment or other big works. On the other hand, payday loans are used to meet immediate money needs, such as for any small expense before the salary arrives.

For personal loans, many banks check your credit score and profile. On the other hand, in payday loans, the loan is often given by just looking at the income proof, because it is very small and for a very short period.

Personal loans are strictly regulated by RBI. Payday loans are given through digital platforms and monitoring of them is still very limited. However, now the rules for this are also getting stricter.

Personal loan is a better option for long term and big expenses. Payday loan is available quickly, but can be expensive and risky. The interest rate and terms of personal loan are easy. It is wise to talk to a financial advisor before taking any loan.