Top 11 payday loan alternatives in April 2019 |

How to avoid a payday loan — Free local resources + 11 other alternatives to consider

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You have other options to consider before taking out a payday loan.

Payday loans are fast and available to most people, but they can be wildly expensive. It’s common to see a 400% or higher APR on a payday loan. If you’re considering a pricey loan, you have other options. From local resources to credit unions, there are alternatives available when you’re facing short-term financial problems so you can stay out of long-term debt.

Local resources in your state

Select your state from the list below to see local resources that offer free financial services as well as help with things like food or utilities to relieve some cash constraints.

Top 3 reasons for borrowing and their best alternatives

The alternatives on this table are intended for borrowers with fair or bad credit. If you have good to excellent credit, you may want to consider a personal loan or a 0% introductory rate credit card instead. These tend to have lower rates and target borrowers with fewer dings in their credit.

For those who don’t have near-perfect credit, these alternatives may come in handy when faced with some of life’s unexpected situations.

ReasonSuggested alternativeWhy it might be better
Emergency expensesInstallment loan or credit card cash advanceThese are short-term options that can get cash to you quickly without the fast turnaround payday loans are known for.
Existing debtDebt consolidation loanA debt consolidation loan could lower your monthly payments by combining two or more outstanding loans into one.
Everyday expensesLook into local resourcesState and county resources are there to help you make ends meet when you’re facing a financial struggle.

11 more alternatives to consider

1. Ask friends or family for help

Consider asking your friends or family to help cover short-term financial needs. They may be more than happy to lend a hand, and you likely won’t have to pay interest on the money you borrow.

2. Use a pay advance app

Pay advance apps like Earnin are an inexpensive alternative to payday loan. Typically, you can get an advance of around $100 or more with minimal fees and no interest. Some request a tip while others charge a monthly fee to access the service instead.

Your employer might need to participate in the program to qualify or you might need to sign up for membership to be eligible. Some also limit how much you borrow to money you’ve already made during your current pay period.

3. Ask your employer

If you’re struggling with your day-to-day expenses, your employer might be willing to help out by advancing part of your pay. Some companies might also have financing programs for their employees, which are typically less costly than a payday loan.

4. Consider an installment loan

Many installment loans come with lower rates and longer terms than you’d find with a payday loan. Applications are quick, and most lenders look at more than your credit score when evaluating your application.

5. Consolidate your debt

If high-interest debt is holding you back from meeting your other financial obligations, you might benefit from a debt consolidation loan. You’ll use the money from a single loan to pay off your outstanding debt from other lenders, then make a single payment each month to the new lender. This reduces the confusion of having multiple payments and may even offer a lower monthly payment while you eliminate your debt.

6. Look into a credit card cash advance

Cash advances aren’t always the best option because of their high APRs, but in a pinch, the fees and terms may be better than what you can find with a payday loan. You’ll have more time to pay back what you owe, making it a much more affordable option.

Avoid payday loans with The Build Card for bad credit

7. Find quick ways to make extra cash

If you’re short just a bit of money, you could find a quick gig to collect some cash. Car and house sharing, selling unwanted items and market research are a few ways you can bring in money if you have extra time. The effort may pay off double-time. You won’t have to pay interest on a loan, and you could discover a new stream of consistent income.

8. Negotiate with your creditors

At the end of the day, your creditors want to get paid, and they may be willing to work with you to ensure that they do. Contact them and tell them you’re having trouble keeping up with your debt. They may help you create a repayment plan or extend your due date to ease your financial burden.

9. Take out a Payday Alternative Loan (PAL)

Some federal credit unions offer an alternative to payday loans called PALs. These run from $200 to $1,000 with APRs capped at 28% by the National Credit Union Administration.

It’s not as fast as a payday loan — you’ll have to become a credit union member to join and even then likely can’t get funding the same day. But it could be a good option if you think you’ll need a short-term loan in the future.

10. Get a loan from a local bank or credit union

Some local banks and credit unions offer small-dollar loans to all members of the communities they serve. Often these are classified as Community Development Financial Institutions (CDFIs), which are nonprofit lenders with the goal financially empowering local communities.

Some might require you to live in a certain area, work in a certain industry or be a member of a particular demographic to qualify for a loan.

11. Seek credit counseling

A credit counselor, community assistance program or other nonprofit can help you create a budget and a debt repayment plan. Credit counseling can help solve the structural issues that led to your financial problems in the first place. You may even have enough savings right away that’ll help you avoid taking out a payday loan.

You can find a reputable credit counseling agency with the National Foundation for Credit Counseling.

Did you know? There's a free mobile app you can use to get cash you've earned today.

Earnin is a free mobile app that offers cash based on your paychecks and work schedule. Request up to $100 a day with an optional tip. Read our review.

Payday loan alternatives to avoid

Not every alternative out there is a good solution. Other short-term loan options tend to come with many of the same risks as a payday loan.

An auto title loan may seem like a solid alternative on the surface because lenders often advertise lower rates. But unlike payday loans, which require no collateral, you’ll have to use the title of your car to secure the loan. This means if you can’t pay back your loan by the due date — usually within 30 days — you risk having your car repossessed.

Another short-term option, installment loans come with similar costs as payday loans. This can be equally bad for your budget, especially if you end up missing a payment. While you don’t need to avoid them entirely, you should spend time comparing your options and finding the best terms. Use caution when borrowing. Only take out a loan for the amount you need, and try to pay it back as quickly as possible to avoid extra interest and fees.

Bottom line

When money is tight, the last thing you need is pressure to divert your hard-earned cash into paying excessive fees and services. Explore your alternatives to make an informed decision on how to best handle your financial situation before taking out a payday loan.

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2 Responses

  1. Default Gravatar
    RoyalSeptember 6, 2017

    What options for a loan…Income retired expense. Senior City Housing

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