How each product works
A payday loan is a small, short-term loan, often $100 to $500, typically due in full on your next payday, about two weeks later. The lender usually takes a post-dated check or authorization to debit your account for the full amount plus a fee.
A Loanify loan is an installment loan. You borrow $200 to $5,000 and repay it in equal monthly payments over 3 to 36 months, with the APR and total cost disclosed before you sign.
The cost in dollars
Payday fees are often around $15 for every $100 borrowed per two-week period. On $500, that's $75 every two weeks, which works out to an APR of roughly 390%.
The same $500 as a Loanify loan at our representative 24.99% APR over 6 months has a payment of $89.51 and total interest of $37.07.
The rollover trap
The real risk with payday loans isn't the first fee. It's what happens when you can't repay $575 in one lump sum two weeks later. Many borrowers pay another $75 fee to extend, or "roll over," the loan. Roll over four times and you've paid $375 in fees over ten weeks and still owe the original $500.
Research from the Consumer Financial Protection Bureau has found that a large share of payday loans are taken out as part of long sequences of repeat borrowing. The single-payment structure is the reason: it asks borrowers to find a large sum all at once.
Installment structure matters as much as rate. If you need $500 and your budget can handle about $90 a month, a loan built around $90 a month is one you can actually finish.Lending tip from the Loanify Editorial Team
Side-by-side comparison
| Loanify loan | Typical payday loan | |
|---|---|---|
| Amount | $200–$5,000 | Often $100–$500 |
| APR | 5.99%–35.99% | Often 300%–500%+ |
| Repayment | Fixed monthly payments, 3–36 months | Full balance in about 2 weeks |
| $500 cost example | $37.07 interest over 6 months | $75 per 2 weeks; $375 after 4 rollovers |
| Credit reporting | Payments reported, can build credit | Often not reported unless in collections |
| Prepayment penalty | None | Varies |
When a payday loan might seem easier
Payday lenders often approve without a detailed credit review, which can feel easier in a crisis. But ease at the start can cost far more later. Before choosing a payday loan, check whether a Loanify bad credit loan, a credit union payday-alternative loan (capped at 28% APR by federal credit union rules) or a payment plan with the creditor is available to you.
Some states ban or cap payday lending entirely, so availability varies by where you live.
Frequently asked questions
Is Loanify a payday lender?
No. Loanify offers installment loans with fixed monthly payments and APRs capped at 35.99%, not single-payment payday loans.
Can I use a Loanify loan to pay off a payday loan?
Yes, if you qualify. Replacing a payday loan with a fixed-payment installment loan can end the rollover cycle. Make sure the new payment fits your budget.
More guides
Is Loanify legit? How to verify any online lender
Loanify loan requirements: what lenders check and why
How to get approved for a small loan
About the Loanify Editorial Team
Our guides are researched, written and fact-checked against federal lending rules, CFPB guidance and current loan terms. Every payment example is calculated with the standard amortization formula. Read our editorial policy.