Money comes and goes. You’ll have some today, make more tomorrow, and just when you think you have enough, you won’t. Instant loans, such as payday loans can help under such circumstances. But they aren’t easy to procure. This is where you have to think of alternatives besides payday loans.
You shouldn’t panic because you might not have to look for a payday loan alternative at all. The lender might just approve your payday loan. The question is: should you opt for a payday loan when there are other alternatives?
Surely, you can fathom the need for options by now. They exist because payday loans might not be suited for every borrower.
Before you get into the details of other options besides payday loans, you should understand payday loans better— what they are, and how can it be an advantage or a disadvantage to borrowers.
Explained: The Truth About Payday Loans
Instant payday loans are lending options that helps you out when you’re facing a financial crunch. You can also consider them as instant loans for borrowers who want money but have a bad credit. As a result, these instant loans are also called bad credit payday loans.
As the name suggests, a payday loan is a sum of amount borrowed from a lender on the guarantee that the amount is repaid with your upcoming salary credited into your bank account.
Your job will be to provide a cheque with the amount to be repaid—including interest and lending charges—to your lender in exchange for the money.
What Makes Emergency Payday Loans so Lucrative?
Instant loans that are paid when your payday arrives are called payday loans. Such loans have a relatively quick procedure to complete the paperwork and procure the amount. Moreover, you’ll need to fulfill minimum criteria to be eligible and the time taken to procure the sum will not be more than 15-20 minutes.
You’ll have to submit your proof of identification, income or some other assurance for loan repayment, and a post-dated cheque. Convenient, isn’t it? Well, you might not even have to go to your lender in person as you can complete the paperwork online.
Payday loans for bad credit in the past or borrowing more than your limit allows for a few more reasons why borrowers opt for this financial solution.
Why Should You Stay Clear of Quick Payday Loans?
When the day arrives to pay off your payday loan, understand that you signed up because you knew that there wasn’t anything called cheapest payday loans.
If you did sign up, you were either in need of quick money to sort out your priorities or were somehow tricked by the lender into believing that you’d have easy money in your hands with cheap payday loans.
Whatever the case might be, once you procure a payday loan, you’ll have weeks until you repay the amount. And this amount will not just be the number you borrowed. It includes a high-interest rate which usually runs in the hundreds and other hidden charges, and loan processing fees.
According to a study on Forbes, it was found that payday loan interest rates were as high as 300%. What’s scarier than this astounding figure is that its imposition on borrowers was legal. So, you can imagine what a borrower goes through when the time repay come around. They usually get more loans to repay the payday loan, thus getting stuck in a vicious cycle of unpaid debts and more financial woes.
The Best Alternatives to Payday Loans
Now that you have a clearer picture about pay day loans and what they bring to the table, it’s time you looked into payday alternative loans. Here are 8 such options.
Don’t get discouraged if you keep getting denied for payday loans. There are better alternatives; and here’s one.
If you work for an enterprise, talk to your HR manager if you can get an advance on your salary before payday. Many employers across the world have this system in place for their employees to help them out in dire financial situations.
There are plenty of payday loans startups and payday loan lenders in USA—and other countries—where you can opt for personal loans.
Yes, you heard that right. Those who dish out payday loans also provide personal loans to borrowers.
The benefits of procuring such personal loans are plenty. You’ll get plenty of time to repay the loan, with the option of paying in installments. What’s more, they won’t necessarily ask you for collateral. This is done after they gauge your ability to repay.
Of course, you’ll repay the loan. But you can be a little late with the repayment. In such cases, your lender can levy a one-time late fee, but not more than this. Such is the beauty of a personal loan.
Borrowing From Your Close Ones
The benefit of borrowing money from your peers, family, or friends is that there are no credit check loans direct lenders.
But be wary about the amount you borrow from them because they can also be facing financial difficulties.
Here’s a tip: try going to your loved ones for money as a last resort. Instead, try other options on this list. This is important because tensions between your loved ones because of money can be much worse than nagging lenders.
When you do borrow some money from them, always make it a point to return it quickly.
Advance on Your Credit Cards
Taking an advance on credit cards might reel in high-interest rates but they’re way lower than interest on payday loans.
Do keep a check on your credit score and try to maintain a healthy score after the loan is repaid.
Pawn Your Valuables
You can always pawn your valuables like jewellery or any other item at a pawn shop and get the money you desire. You might have to pay a little interest for the money you get.
Just be sure to pay off the loan and acquire your assets once you have money in your hands.
Opt for Local Help
There are often local communities and social groups which help out people in time of difficulties. And that includes monetary relief as well.
Contact one of these groups and explain your situation. You’ll definitely get assistance from them. However, do repay the loan and be an active contributor in such gatherings later on.
Credit Card Payment
If you have a good credit score and a steady income, use your credit card to fund the cash crunch instead of opting for a payday loan.
However, don’t make this a habit as your credit score reflects your financial stability. Try to pay for utilities and purchases with cash or through a debit card.
Use Your Savings
Finally, you might just have to break your savings to help you out in a financial mess.
Remember that you opted to save your money in the first place to assist you in times of trouble. Just go ahead and use what you need.
Once you’re done trying to build your savings again. Deposit twice what you did in the past and opt for other ways to preserve and grow your earnings.
Payday loans can be both a blessing and an affliction. A report by Forbes suggests that financial authorities are directing lenders to evaluate a borrower’s financial credentials thoroughly before approving of a payday loan.
That said, you should stay away from borrowing money at all times. Start investing in financial plans and cut down on your expenses to conserve money. At the end of the day, self-help is the best help.