Payday Loan Alternatives

Payday Loan Alternatives

March 5, 2021

Every year approximately 12 million Americans take payday loans, though payday loans possess the business of making very high-rate loans. Thus, the article suggests alternative ways to overcome unexpected expenses without getting trapped in a cycle of debts.  

Personal Loans

Personal loans are based on the consumers’ credit history and income. These loans are also called “signature loans” or “unsecured loans” as they do not require collateral to secure the loan. Personal loans should be repaid with fixed monthly payments. Besides, the lenders may require a trustworthy co-signer, and in case of bad credit history, it is necessary to pay rates similar to credit card rates.

Installment Loans

Installment loans provide money that should be repaid with regular payments or installments. Each repayment for the installment loan includes a portion of the principal amount plus interest. The amount for regular installments stays the same within the loan term and allows the borrower to budget his fixed expenses in advance.

Paycheck Advance 

Some employers across the country sometimes offer their employees the money they worked for before their payroll is due. A paycheck advance is short-term unsecured lending provided to the employees by the employers’ willingness in advance. The concept of a paycheck advance is to cover urgent bills till payday. The process of lending a paycheck advance should be controlled by an agreement on how the debt should be repaid. 

Local Banks and Credit Unions

The state laws allow community banks and credit unions to make small loans with more comfortable repayment procedures. The borrowers should simply compare the interest rates and apply for the one that meets their needs most. 

Community Charities

Inside America, there are districts where local charities are designed to offer financial assistance to the dwellers. The great nonprofits’ website will give the areas where community nonprofits work. However, as these organizations survive merely on donations, they won’t be able to provide a large amount of money for a long time. 

P2P Lending

Online peer-to-peer lending sites can be another alternative to payday loans. P2P lending is also called “social lending” or “crowd lending” as it enables individuals to take loans directly from other individuals. Each website has its terms and a wide range of interest rates based on the borrowers’ credit reliability. 

Borrow Money from Relatives

The fastest solution to your unexpected expenses is borrowing from friends or family. Thus, you will avoid paying high-interest rates or will not even pay anything more than the provided amount. However, we highly recommend building an agreement that will make the conditions of the loan procedure transparent. 

Wrapping Up

Millions of people all over America appear in challenging financial situations when they seek for resources to cover their bills. That’s true; in such cases, payday loans are easy money; however, there also exist alternatives to payday loans that can become another suitable means for solving the problem of urgent bills. These options may be affordable choices in demanding financial situations and alleviate unexpected expenses.