What Are Good Alternatives to Payday Loans?
Alternatives exist for payday loans that enable you to get fast cash in a more sensible way. Getting a pay day loan can sometimes seem like a good way to quickly get yourself out of a financial jam fast, but because of their high interest and very short payment terms, it can be quite easy to get yourself into even more financial trouble due to a pay day loan. If you are unable to pay off your loan fast, you can find yourself quickly circling around a cycle of growing debt. It can get frustrating, expensive, and downright scary.
Knowing that, you might be interested in weighing your alternatives before taking out a payday loan. If you are like most people who take out payday title loans, and do not have the fantastic credit necessary to take out an unsecure personal loan, here are some other options that might be available to you.
Take a credit card cash advance.
Cash advances are known for being incredibly expensive, but still, they are often cheaper and less predatory than payday loans. Any borrower with a reasonable amount of confidence that they will be able to pay back their loan within a few weeks (which is also a normal payment term for payday loans), a credit card cash advance could actually end up being rather cheap.
Of course, the main danger with these types of loans is that the balance will take time to pay off and the interest can spiral out of control in the meantime. On the other hand, the very same can happen with payday loans.
Apply for a short-term bank loan.
Before committing to the jaw-dropping interest rates attached to most payday loans, consider your options. Perhaps the first option you should look into is applying for a loan from a bank or credit union. If you have a job, you may be able to qualify for a short-term bank loan. Even the most expensive loans coming from these types of institutions will be far cheaper than the interest rates connected to payday loans.
Some banks may even issue collateral lows, so you can use your car to get approved even without good credit, and get a lower interest rate to boot!
Apply for a peer-to-peer loan.
Peer-to-peer loans are a good alternative because the money is funded by investors, not banks. That means approval rates are much higher. Even if you have poor credit, interest rates top out at about 30 percent. While that is a bit higher than the average payday loan interest rate, the one thing that peer-to-peer loans offer that payday lenders don’t is a higher minimum loan amount, which means you could end up getting more money if that is what you need.
Also, payment terms are longer and much more flexible so that you can actually have the time you need to raise the money necessary to pay back your loan.
Beyond that, there is also no penalty for prepayment on the loan which can come in handy if you gather the cash before the end of the payment term and want to save yourself some cash.
Car Title Loans
Car title loans are somewhat like payday loans in the sense that they are small, short-term loans. Where they differ, however, is that while a payday loan is unsecured, a car title loan is a type of collateral loans based off the value of your car and the equity you have in it.
Car title loans can have a fairly nasty reputation depending on who you ask, but they are a great option if you need cash fast and have poor credit.
Ask for a loan from family or friends.
This might be a tough one to get the courage to do, and sometimes it is better to not mix blood and money, but it is definitely one of the most forgiving options on this list. If you are worried that this may strain a relationship, keep in mind that you can approach someone you are hoping to borrow from and frame out the loan in a very professional manner.
Set up payment dates, set up a payment term, or offer something as collateral for your loan. The benefit of this is that obviously, personal relationships are going to be more forgiving than business ones. They may charge a miniscule interest rate compared to other lenders, or no interest rate at all.
Pick up an extra part-time job or side hustle.
This is obviously totally dependent on your current work schedule, but one possible option to making more money is to simply start working more. Be creative and look for a job that you can do from home, or a freelance gig that you can do only when you are in need of extra cash to make ends meet. Alternatively, consider selling potentially valuable belongings that you either no longer need or no longer want.
The only requirement when it comes to this solution is hard work. No one is going to give a job to you just because you need it. You’re going to have to work just to find work, and that’s on top of the job you already have. It can be hard to motivate yourself to do this, so make sure you have the time and energy to actually do an extra job before you start looking for one.
Negotiate with your creditors.
If the main reason why you are looking for payday loans is because you are dealing with credit card debt or other lenders. Consider contacting them first and explaining your situation to see if you can negotiate a new deal. You’ll be surprised how far a different payment arrangement, lower interest rates, discounts, or waived late fees can go in terms of lessening your financial burden.
None of these options are ideal. Ideally, you do not have to consider taking out a loan of any kind to make ends meet, but that it not always a realistic desire. If you are in need of quick cash, a payday loan could be the right option. You owe it to yourself, however, to exhaust the other options available to you as well before you make your final decision.