Alternatives to payday loans

Alternatives to Payday Loans

Most people rely on payday loans because they are very common and easy to obtain. When you find yourself in a financial crisis and you are nowhere near the end of the month, payday loans can help you out. When it is time to deal with that medical emergency but you are completely out of cash, you can get a payday loan to help you through it. Many people expect that once they take a payday loan, they will pay it back when their salary comes and then end it there. However, payday loans are really enticing. Most people fall victims to this trap. Because these loans are easy to acquire, you may take it again after paying off the previous one. Then the cycle continues and you may be unable to repay. It is almost always difficult to get out of the cycle due to the high interest rates. The rates keep building up every time you take another loan. The good news is that you do not need to take payday loans all the time. There are several options that can equally help you to deal with that emergency.

  • Payday loan alternatives

  • Personal installment loan

You can obtain this loan from banks, credit unions, and even online lenders. You will pay this loan back in monthly installments. The interest rate on installment loans are lower than payday loans. even if you have bad credit, online lenders can offer you bad credit installment loans.

  • Payment plan with creditors

If you are taking out a payday loan to clear an urgent debt, you can talk to the lender instead. You can discuss your financial situation with the lender. The lender can help you to develop a payment plan to pay your debt. For instance, the lender may agree to lower your monthly payments. Sometimes, you may be in a financial crisis because your monthly payments are higher than what you earn. If the lender agrees to lower the monthly payment, you would have solved the problem without taking out a payday loan.

  • Credit counseling

Credit counseling
Credit counseling

You can also opt for credit counseling. This will not be an immediate solution for your financial situation but it may help you in the long run. Counseling will help you to manage your finances very well. if you take this counseling serious, you will no longer depend on payday loans.

  • Paycheck advance

Instead of applying for a payday loan, you can request for an advance from your employer. If it is a big company, you can ask from the team in charge of salaries. If it is possible, you can get an advance. This option is better than payday loans, because you will not pay interest. After all, you are only taking your salary in advance. It should, however, not become a habit.

  • Credit card cash advance

This loan option also has high APR. You may pay an APR as high as 30%. This option is, therefore, not ideal if you need an alternative for payday loans. However, credit card cash advance is still better than a payday loan in most cases. This is because, this option is still less expensive when compared to payday loans. You should, however, be cautious when you apply for this loan because some lenders may ask you to secure the loan with a personal property.

  • Emergency assistance

Some organizations in your community can also help you to pay off some of your financial commitments. If you are in an organization that does that you can try contacting them.

  • Bank or Credit Union Cash Advance

Family and friends
Family and friends

Some banks or credit unions offer cash advance services. This option is better than a payday loan since it is less expensive. You should consider checking with your bank or credit union.

  • Family and friends

You can also go to your family and friends if you are only looking for a small amount to tide you over. You should do this with caution because taking out loans from your friends and relatives can strain your relationship if you do not pay on time. You can offer them a good interest rate and make sure you pay back the loan at the time promised.

  • Pawnshops

Instead of getting a payday loan, you can get a loan from a pawnshop. If you have something valuable, you can leave it at a pawnshop in exchange for the cash you need. The charges may vary from one location to the other.

  • Life insurance loan

Some insurance policies allow you to take out a loan from the amount you have contributed. You can pay back the loan in your own time. If you do not pay the loan, it will be subtracted from your insurance benefit.

There are several options to consider when you need a short-term loan. Some of them may not even be included in this list. You should explore these options before you consider payday loans. Since payday loans are expensive, they should be your last option. Even if you need to get a payday loan, you should check several lenders and choose one who offers a good rate.


George Johnson

Author: George Johnson

George is an accountant that specializes in debt solutions and financial consultancy. He is an expert when it comes to unsecured loans and their terms and conditions especially when it comes to APR. He plans on sharing more about his knowledge to help those who are planning to take on short-term loans.

Get Started Now!

By clicking on "Get Started!", I agree to the Terms of Use, Privacy Policy and ESIGN Consent