Here are 10 payday loan alternatives to keep in mind if you’re short on cash.
1. Try an alternative payday loan
Some credit unions offer alternative payday loans, or PALs, which are loans designed to provide a lower-cost alternative to payday loans. You can borrow up to with this option $1,000 and the loan term ranges from 1 to 6 months. As long as you’ve been a member of the credit union for at least a month, you can get a PAL.
Keep in mind that alternative payday loans can still carry fairly high interest rates. Happily, PAL interest rates are capped at 28% by lawwhich is far better than what you typically see on a payday loan.
2. Set up a payment plan with the company
If you’re having trouble making payments before getting a payday loan, see if you can set up a payment plan with the company you owe money to. Talking to the company can be awkward, but this is a better alternative than missing out on a payment.
So ask if you can set up a payment plan as an alternative to a payday loan. You may be able to pay part of the payment now and the rest later. If you have Federal student loans, you can call your credit servicer and see if you can defer or pay off your loans. You can also consider an income-based repayment plan where your monthly payments are reduced to a small portion of your discretionary income.
The key is to take action and talk to your lenders about a payment plan to see what options are available.
3. Borrow from a payday advance app
If you have a steady income and are looking for an advance on your paycheck, consider using a Payday advance app. Payday advance apps offer borrowers more flexibility and affordability than payday loans. The biggest difference between a typical payday loan and payday loan apps is that apps do not charge interest since payday loans are not considered loans.
Payday advance apps like Earnin and Dave will give you a portion of your upcoming paycheck with no interest. Fees are limited, although some apps allow you to tip voluntarily.
4. Dive into your savings
Building savings is difficult and can take a long time. when you finally Expand your savings account, which can give you a sense of security. If you’re lucky enough to have a solid savings account before applying for a payday loan, consider diving into your savings.
This is one of the reasons you start by building a savings account. Things come up and your savings can act as a buffer. Again, rebuilding the savings account is better than paying off a payday loan. Withdrawing money from your savings account is like taking out a loan for your future self. Wouldn’t you rather pay yourself back than a predatory lender charging 400% payday interest on the loan?
5. Borrow money from family members or friends
This isn’t an option for everyone, but if you have trusted family members or friends who can lend you money, consider borrowing from them. Will your parents lend you some money, interest free? Do you have a close friend who can only see you for this one time while you pull yourself together?
If you do, be clear about the amount and the time frame in which you will pay them back. Walking this path can be difficult, and you don’t want to burn bridges or ruin relationships with family or friends, so think twice. However, if it is a no-obligation option, it can help you avoid a payday lender.
6. Earn extra money with a part-time job
Cutback is the first thing you should do when you need extra money. But once you’ve cut everything you can, your next step is to make more money. If you have free time, you can start side-hustling. A part-time job is a job you do on the side to make more money; for example, I worked as a brand ambassador and freelance writer as a side hustle while paying off debt.
There is many side jobs available including babysitting, graphic design, dog walking, Uber, Postmates, etc. Find your passion and focus on your skills.
7. Get a personal loan from a bank or credit union
When you need to pay off debt or cover your basic expenses, you don’t want to resort to a payday loan as your first option. But you may be wondering, “Where can I get a loan that doesn’t have that high an interest rate?”
You may consider getting a personal loan from a bank or credit union. If you have good credit, a bank or credit union will often offer a much lower interest rate than a payday lender. Can you get a loan with a bad credit bureau? It depends on the lender, but your chances of approval might be lower.
A bank or credit union is a good option if the financial institution offers you a loan with a good interest rate and repayment terms.
8. Sell your stuff
Sometimes it just takes a little creativity to make a quick buck. One thing you can do is sell things you no longer want or need. Now it’s time to clean up and get rid of everything that isn’t fun! If you don’t use it that often, leave it alone.
You can sell your items on Facebook Marketplace, OfferUp, Poshmark and Craigslist. Just think: getting rid of your stuff may be just what you need to make some extra money and help you avoid a payday loan.
9. Break out the credit card
While I would never condone getting credit card debt, if you’re thinking of going to a payday lender, your credit card is probably a better option. Although many credit card rates can be about 16% and morewhich is still better than what payday loans offer.
So you’re more likely to pay less interest if you use your credit card strategically. Just make sure you don’t overcharge your credit card as it will affect your credit card credit utilization. This in turn can lower your credit score.
10. Use a line of credit
Another possibility is use a line of credit. Financial institutions may offer a line of credit that you can draw on when you need money. A line of credit differs from a loan in that it has a fixed amount that you can draw down. You only pay interest when you borrow the money.
If a financial institution offers you a line of credit that gives you quick access to capital, it may discourage you from taking out a payday loan.