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Alternatives to payday loans

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Payday loans are one of the most popular types of loans you can get, and that is mostly due to the fact that they are very easy to obtain. In some cases, a payday loan help could be exactly what you need to take care of emergency bills or to stabilize your finances and better manage your debts with payday loan consolidation. However payday loans come with a price and that is the high interest rate they carry. People who take out a payday loan expect it to be a one-time thing. They take out the amount fully intending to pay it back in two weeks or less. However, the average payday loan customer is in debt for five months or longer. So before you jump in straight for a payday loan, it’s best you look at other options. Here are some payday loan alternatives that could be a better match for your situation.

  • Payday loan alternatives

  • Personal installment loan

One alternative is a personal unsecured installment loan from a responsible lender such as a bank, credit union or other financial institutions.

  • Payment plan with creditors

If the problem involves debt, you can contact one or more creditors and negotiate partial payments or work out a payment plan on a temporary basis. Sometimes, delaying or lowering a payment or two is all that is needed.

  • Credit counseling
Credit counseling

Credit counseling

While it is not an immediate solution, credit counseling can be quite helpful in avoiding getting stuck in deeper debt.

  • Paycheck advance

Some employers grant paycheck advances. If you work for a large company, you should check with the human resources department if a paycheck advancement is possible. With a small business, ask the owner about an advance. Usually, since this is an advance and not a loan, there would be no interest. It’s important, of course, not to abuse this practice.

  • Credit card cash advance

Even though a credit card cash advance isn’t ideal, even at 30% APR, it’s still much less expensive than a payday loan. However, be aware that some credit card companies take advantage of consumers who need quick cash by offering a secured credit card tied to a savings account or other assets.

  • Emergency assistance

Often, local churches and community organizations provide emergency assistance, providing help with everything from groceries to utility bills, to making payment on your car.

  • Credit union or bank cash advance
Family and friends

Family and friends

Many credit unions and banks have overdraft protection or cash advance provisions. Although more expensive than an installment loan, these options are less costly than a payday loan. Check with your credit union or bank to see what is available and sign up.

  • Family and friends

Although borrowing from people you know can strain relationships, if you need a small amount for a short period of time and you’re sure you can pay it back, this option may be for you. Offer to pay reasonable interest on the money you borrow since chances are whoever lends you money is taking it out of another interest-bearing account.

  • Pawnshops

If you have something of value you can use as collateral, a pawnshop might just be a loan option worth considering. Finance charges vary by location, so make sure you know what the cost of borrowing will be.

  • Life insurance loan

Many whole life insurance policies provide for loans as long as you have cash value in the policy. Best of all, you have your entire life to pay back the loan. If you fail to pay it back, the insurance company subtracts the loan from the death benefit.

  • Conclusion

It’s likely that there are more alternatives to a payday loan than you realize. One or more of them may very much fit your needs and be worth considering. Options that don’t include borrowing should be explored first, though almost any other choice is better than a high interest payday loan.

 

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