Still confused between personal loan vs payday loan right now? Don’t know which one to apply for your home renovation, on buying an appliance, or other bills? It’s important to understand the difference between the two to make sure which one fits your needs and won’t lead you to regret it!

Here’s the difference!

How does a personal loan works?

A personal loan is the process of you formally borrowing money from the lender and repay with a certain period of time or installment.Personal/installment loan is usually used in home repairs, travel, education, electronics, business, auto loan, or even weddings. As you can observe, these scenarios are not uncertain or emergency. These are planned, or you’ll probably use it in the future.

You can apply for a personal loan by:

  • Filling-up the application form on the lender. You can submit the requirements including the documents to the bank
  • Checking and validation. The bank will validate the details. They can also call you.
  • Approval. It can take within a week.

Who offers a personal loan?

In the Philippines, you can avail personal loans through commercial banks like BPI, BDO, Maybank. Security Bank and government agencies like SSS and Pag-IBIG. Each bank may vary on the requirement and interest rates.

Advantages of Personal Loan

  • Longer payment terms. Most bank repayments are from 12, 18, 24 or 36 months
  • You can choose the repayment method of your choice. If you choose a longer payment period, your monthly repayment is lower but with a higher interest rate and vice versa.
  • Lower interest rate than a payday loan. The average monthly interest is 1-2%
  • Lower interest rate than credit cards. Credit cards have average rates of 2% to 3.54%

Disadvantages of Personal Loan

  • Processing is longer than a payday loan. Usually takes five to seven working days
  • Banks charge a pre-termination fee when you pay off earlier
  • There are penalty fees for late repayments

How does a payday loan works?

A payday loan is a short-term loan, usually an unsecured offered by different loan agencies in the country. Unlike a personal loan, a payday loan is usually used in emergencies like unexpected bills, unnecessary scenarios like hospitalization/medical needs, house repairs due to calamities. As you notice, these scenarios need immediate action or as soon as possible!

The payday loan process is very easy. Most are offered online where you can just:

  • Click the apply button
  • Fill-up the needed information
  • Submitting the required documents (2 valid ID’s, Billing statement as proof of address, payslip if your employed, latest bank statement if you’re self-employed)

And that’s it! You just need to wait for your lender’s call for some validation. And if all info is approved, your cash will be released usually within the day only.

Who offers a payday loan?

Payday loans are usually offered by private companies that must be registered under the Securities and Exchange with a Certificate of Authority (CA). You can check the list of legitimate payday lending companies on You can also see all the details here; the news, announcements, and even the suspended companies.

Advantages of Payday Loans

There are several advantages of payday loans:

  • It’s easy and fast – the application process is very easy. In fact, you can do it in as fast as five minutes or less. The application is also online. It’s accessible.
  • Requirements are very minimal
  • Approval is fast. It can take within the day only.

Disadvantages of Payday Loans

  • High interest – payday loan lenders range from 3% to 20%
  • Shorter payment terms. Most payday loan lenders are payable within 30 days only
  • If you can’t make the repayments, you can be in serious debt!
  • There are also penalty fees for late repayments.

Be informed!

Now that you know the difference between personal loan vs. payday loan, you can now decide which one you should apply for! Don’t confuse yourself. Be smart enough on which between the two you should use in case you need one.

And be reminded that having a loan is not bad, but you need to be responsible in managing your finances and understand why and where you need it. Remember, loans can get you to serious debt if you don’t take it seriously. Use it when you just need it. Not when you want it only!

But if in case you’ll look for a payday loan, we can also help you! In Pahiram, we offer low-interest rates, with a fast application only! Just visit our home link, the about us section to know more about who we are and how can we help you! You can also call us on below contact and talk to one of our advisors and let them explain what you can get!


(2018 Dec 14) Personal Loans for First-time Borrowers

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