Payday loan alternatives in Pennsylvania

Payday loans are illegal in Pennsylvania

Payday and auto title loans have been illegal in Pennsylvania since the Check Cashier Licensing Act passed in February 1998. This was done for a few reasons, but perhaps most importantly, to prevent payday lenders from charging consumers excessively high rates.

In addition, Pennsylvania’s Loan Interest and Protection Law (LIPL) prevents lenders without a CDCA license from charging more than 6% per year on loans under $50,000. But broad exceptions and loopholes in the law make these rate caps meaningless. That’s why credit cards and loans from unlicensed lenders outside of Pennsylvania have rates far exceeding 6% APR – sometimes into the triple digits.

As always, read any loan contracts carefully to make sure you understand the APRs and fees you’re paying, including late fees and prepayment penalties. If you believe a lender is violating the law by charging excessively high rates, you can file a complaint with the Pennsylvania Department of Banking and Securities.

4 short-term loans you can get in Pennsylvania

If you have bad credit and need cash, you have plenty of other options. Consider these cheaper alternatives:

Cash advance apps

A cash advance app is a convenient way to borrow against your next paycheck – typically from $20 to $250 or more – and without interest charges on what you borrow. You can also borrow money without a credit check. Instead, to qualify for advances, you typically need to establish regular direct deposit activity from an employer or other source.

While some cash advance apps charge a monthly fee between $1 and $10, some are free, and you can usually get your money in a few business days. But if you need same day advances, you’ll pay an instant transfer fee. Be sure to compare instant transfer fees across apps to find the cheapest one for your situation.

Personal loans

A bad credit personal loan from an online lender or local lender like Mariner Finance can also provide fast cash in Pennsylvania – you could have your money as soon as same day. And unlike payday loans, bad credit lenders like OneMain Financial, Oportun and Mariner Finance cap their rates at 35.99%. But unlike payday lenders, you usually need a hard credit check to qualify.

To qualify for a personal loan in Pennsylvania, you may need a credit score of around 620, although some lenders go as low as 300 and some have no credit score requirement at all. As long as you can prove you have sufficient income coming in from an employer or other source, you could qualify.

Payday alternative loans (PAL)

PALS are small, unsecured loans offered by some federal credit unions. Regardless of your credit score, you might qualify for a PAL with an amount between $200 and $1,000. PAL APRs are capped at 28% and repayment terms range from one to six months. But they’re not for people who need fast funding. You need to be a member of a PAL credit union for at least a month before you can qualify.

Employer paycheck advance

Instead of turning to a loan, you can see if your employer offers a paycheck advance. Some companies offer paycheck advances or short-term loans to employees, typically at lower rates than what you get on a bad credit personal loan.

How much do short-term loans cost in Pennsylvania?

As mentioned earlier, licensed lenders in Pennsylvania aren’t allowed to charge more than 6% on loans under $50,000. But banks and unlicensed lenders that operate outside of Pennsylvania can charge rates that far exceed 6% – up to 35% or more – and some charge origination fees of 1% to 10% on top of that.

So the actual cost depends on the lender and the loan product. The higher the rate and the longer the term – the more interest you’ll pay back over time. To minimize the cost, try to find the lowest rate and choose the shortest repayment term you can afford.

Assistance programs available in Pennsylvania

There are several programs in Pennsylvania that provide financial assistance to low-income individuals and their families.

• Supplemental Nutrition Assistance Program (SNAP). This program helps low-income Pennsylvanians pay for food with an EBT card. You can apply for SNAP benefits using COMPASS.
• Low-Income Home Energy Assistance Program (LIHEAP). This program helps low-income Pennsylvanians pay their heating bills in the form of a cash grant.
• Temporary Assistance to Needy Families (TANF). Also known as cash assistance, the program provides low-income Pennsylvania families with financial help. Families must have assets under $1,000 to qualify.
• Medical Assistance (MA). Also known as Medicaid, this program pays for health care services for eligible individuals, including medical and mental health services.
• PA Housing Finance Agency (PHFA). This is a homebuying program for low-income Pennsylvanians that offers home loans with reduced rates and fees. You could also qualify for downpayment and/or closing cost assistance.

You can find more resources by visiting the Pennsylvania Department of Human Services website.

Bottom line

While you can’t get a payday loan in Pennsylvania, you still have other options that can help you out. These include zero interest cash apps, bad credit personal loans, PALs and government resources. See our guide on other short-term loan options or installment loans that can help you get the money you need.