Payday loan alternatives in New York

If you’ve found yourself short on cash and need to borrow a small amount of money, you may be considering a payday loan. However, New York is one of several states that consider payday loans illegal. Our guide gives you cheaper options that may be able to help you borrow money in a bind, and at a much lower cost.

Payday loans are illegal in New York

NY Banking Law 373 bans check cashers from making loans or advancing cash, and NY Penal Code 190.40 caps interest at 25%. This effectively makes it illegal for payday lenders to operate, both in-store and online. That’s because payday loans charge predatory insurance rates, which can run well over 700% APR.

Even though you can’t get a payday loan in New York, you should still familiarize yourself with the laws and read all the paperwork of a loan before signing. It’s important that you can repay what you borrow to avoid more debt in the future.

4 short-term loans you can get in New York

Maybe you have bad credit, or maybe you just need money quick, either way there are short-term loan options to consider in your situation.

Cash advance apps

The top cash advance apps offer a way for you to borrow money without a credit check. And, most cash advance apps offer a way to get funds in one to three business days for free, or instantly for a small fee.

Cash advance apps typically allow you to borrow up to $250 or more per pay period. However, you’ll likely need to show regular direct deposits in your bank account from an employer or other source to be approved. Advance amounts start out low, but with responsible borrowing you can increase that amount over time. Cash advance apps are a cheaper alternative compared to payday loans, and likely less risky.

Personal loans

If your credit is the issue, you may be able to find a bad credit personal loan online or from a local lender. In some cases, you can have your money as soon as one business day after approval. Even bad credit personal loan lenders cap their rates around 35.99%. However, you will need a credit check to apply, most lenders want to see a score of at least 620, but there are lenders that accept lower scores.

Payday alternative loans (PAL)

These loans are small, unsecured loans typically offered by some federal credit unions. PALs can come in loan amounts from $200 to $1,000, and you may qualify regardless of your credit score. APRs are capped at 28% and you generally have up to six months to repay the loan. However, they don’t offer a quick cash solution, as you typically have to be a member of a PAL credit union for at least a month before qualifying for this type of loan.

Employer paycheck advance

You may be able to avoid a loan altogether by asking your employer for an advance on your paycheck. Some employers offer advances or short-term loans to employees, and at a far less cost than any other bad credit personal loans.

Compare cash advance alternatives to payday loans

How much can lenders charge in New York?

Many loans have compounding interest and financing fees which are represented as an annual percentage rate (APR). In New York, this is capped at 25%. If you make a late payment or miss one entirely, you will likely have to pay a fee, and your lender can charge you a non-sufficient funds (NSF) fee if you don’t have enough funds in your account to complete a payment. The amount you pay in fees depends on the lender and the type of loan you take out.

Assistance programs in New York

There are a wide variety of assistance plans available in New York that may be able to help in your specific situation.

• Home Energy Assistance Program (HEAP). Can help New Yorkers heat or cool their home, those who are eligible can receive one regular HEAP benefit per program year.
• Supplemental Nutrition Assistance Program (SNAP). This program allows electronic benefits that can be used as cash to pay for food.
• Temporary Assistance (TA). Short-term financial help for adults and children which may help pay for short-term expenses while you’re between jobs.

Bottom line

Although you can’t take out a payday loan in New York, you still have other ways to get a little help with your finances such as short-term loan options or installment loans. If you find yourself constantly short on money, you can also consider speaking with a credit counselor.

Do you have any more questions about payday loans in New York?

Why are payday loans illegal in New York?

The high APR and fees borrowers have to pay make many people feel that payday loans are predatory.

Who can I contact if I want to file a complaint about a payday lender in New York?

You can get in touch with the Department of Financial Services or the Consumer Financial Protection Bureau.

Are auto title loans legal in New York?

No. Like payday loans, these have high interest and the possibility of your car being repossessed if you default so New York has made them illegal.