Payday Loans vs. Line of Credit Loans: Which Is the Best for You?

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Need money? Are you researching personal loan options available to you? Don’t worry, you’re not alone. Millions of Americans make this choice each year and are faced with comparing personal loan options. Let us help you navigate payday loans vs line of credit loans to make an informed decision.

Here’s the thing, life happens. We know it, and I think just about everyone in the world has come to a point where they needed a little extra help to get by, and that’s okay. Whether you have come a little behind on your bills, had a recent costly medical emergency or need to finally get new tires for your car, life’s little surprises tend to always drain your bank account. That’s why lenders are here for you. To help you cover those unexpected expenses. Once you’ve established that you need some extra cash, the next decision is which solution is the best for you.

There are many different options of financing for you to choose from. Some of the two most popular for quick cash solutions are single-pay payday loans and line of credit loans. Understanding the pros and cons for both a payday loan and a line of credit will help you determine which solution is best for your financial situation. First, we will outline the basics of what each one is and identify the pros and cons for both. Then, you can make the best decision for your current financial situation.

What is a payday loan?

Payday loans are short-term loans for consumers that need quick cash for an expense or for cash to make it to their next paycheck. Single-pay payday loans are typically paid off in full on your next payday. This financial solution should be used for emergency expenses or to avoid becoming overdrawn on your bank account. Payday loans are accompanied by a loan fee that is charged during loan payment. For example, a person in California taking a loan for $255 will repay $300 when the loan is due.

For more information, see how a payday loan works.

Fees for payday loans; however, are typically less expensive than a charge for a single overdraft fee. Let alone, several, if you were unable to make a few payments. On the flip side, payday loans should only be used as a short-term solution and should be used for financial emergencies only. Also, different states have different legislature regarding payday and short-term loans. Meaning, customers in one state may receive different loan amounts than customers in another state. For more information regarding legislature on short-term loans in the states where we operate, read our rates and terms

What is a line of credit loan? 

A line of credit loan is a fixed amount of money that consumers can borrow “up to.” Meaning, if you are approved for $500, but you only need $200, you borrow that amount and have $300 left in your line of credit. You can pay off the $200 and not have to borrow against the line of credit again or you might have an emergency and must take out the remaining balance.

Individual lines of credit are useful because you only apply one time and you can repay and take out to your specified amount as often as you need, granted that you are making payments on time and keep your account active by using it.

Getting approval for a line of credit usually means a credit check which depends on the lender. When you work with Net Pay Advance, you can be at ease knowing that we do not run hard credit checks for our line of credit loans. 

Interest on lines of credit loans is charged by the day, and so it is highly recommended to pay off such loans as soon as possible. Billing cycles for line of credit loans can be different in different cases. For instance, some line of credit loans may have an initial draw period when you can take out loans and male minimum payments followed by a repayment period withing which you’ll need to pay off the remaining balance. Others might set a predetermined repayment amount and period for each draw akin to taking out an installment loan. At Net Pay Advance, you can borrow and repay as you prefer to but a minimum payment along with any past due amount, applicable interest, and fees will be due at each billing cycle. We schedule billing cycles to sync with your paydays which may be bi-weekly, bi-monthly, or monthly. 

Different states have different legislature regarding personal line of credit loans. Meaning, customers in one state may receive different loan rates and terms than customers in another state. The type of line of credit matters too, depending on if it’s a personal, home, or business line of credit. In our case with this article, we’ve mostly focused on personal line of credit loans. For more information regarding legislature regarding line of credit loans in the states where we operate, click here,  

Comparing Payday Loans vs. Line of Credit Loans

Both single-pay payday loans and lines of credit can be a great solution for you, but both have their own pros and cons. See below:

Payday Loan


  • Less strict qualifications
  • Set repayment amount
  • One-time fee per loan
  • Same day or next day funding


  • Expensive fee
  • Re-apply for every loan
  • Full payment on payday

Line of Credit Loan


  • One-time application
  • Higher loan amounts available
  • Only take what you need
  • Revolving line of credit for ease 


  • Interest charged daily
  • Repayment amount can fluctuate
  • Sometimes stricter qualifications depending on lender 

Final thoughts

In conclusion, both payday loans and line of credit loans offer valuable solutions depending on your financial needs. Payday loans are suitable for those requiring a quick, short-term fix. In some cases, they have a less stringent approval criteria. On the other hand, line of credit loans offer flexibility and access to funds over a longer period, though they come with daily interest charges.  

Assessing your financial situation, repayment ability, urgency, and availability of options in your area will help you choose the best option. Always ensure you understand the terms and conditions before committing to any loan! 

Please note that at Net Pay Advance our personal loan options are dependent on the state. See what loan availability is in your area. 

See which loan options are available in your state

Net Pay Advance is a licensed loan provider, locally owned and operated in Wichita, Kansas. Our No. 1 priority is helping you, the customer, by providing access to the cash you need and helping support financial independence goals with valuable, informational, and entertaining content. Stay up-to-date on our posts by following the Net Pay Advance Facebook, Instagram, and Twitter pages. Our organization is committed to transparency; learn more about our authors and editorial policy. The information provided within this blog is for educational purposes only and should not be construed as financial or legal advice. Please contact us if you have any questions.

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