In This Article, we are going to list 8 Smart Alternatives to Payday Loans
The average American family has under $10,000 in savings. That truth has made weathering difficult times nearly impossible for large swaths of the population, particularity during times of global economic strife.
The lifeline that many have turned to during dire situations is a financial product called payday loans.
Payday loans are extremely popular because they put cash in people’s pockets, fast. Unfortunately, the terms they carry can be expensive, destructive and may leave borrowers worse off.
So then, are their alternatives to payday loans?
The answer to the question is yes, although, not all alternatives will be available to all borrowers. Below, we itemize every other payday loan option we can think of in hopes of connecting you with a better borrowing choice.
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List Of 8 Smart Alternatives to Payday Loans
8 Smart Alternatives to Payday Loans Given below
- Borrowing From Friends and Family
There’s only one loan that we’re aware of that has a low chance of incurring fees and doesn’t require an application. That loan is one that comes from friends and/or family members.
Borrowing from friends and family is undoubtedly tricky. Not only is money an awkward subject to bring up but it also carries the possibility of ruining relationships if you don’t pay back your debts.
Still, if you have somebody in your life that you know can afford to help you out and you feel good about the prospect of paying them back, give it a try.
- Talking to a Credit Union
Credit unions are like banks with the key difference that they don’t operate for profit. They exist to serve their communities.
This community focus makes its lending products less predatory when it comes to interest rates and fees.
If you need to borrow money, consider visiting a credit union in your area to see if your qualify for membership. Then, ask what loans might be available to you. Most credit union loans will require proof of income and acceptable credit history.
- Head to the Bank
If you have an existing relationship with a big-name bank, lean on that relationship to get access to loan funding. Any bank you visit will have a slew of short-term and long-term loan options. Most of these products won’t require collateral.
Have your bank rep run your information to see if you qualify for anything. Be sure to remind your teller of how long you’ve been a customer with them, if applicable, as years of loyalty may help your case when borrowing.
- Crowdfunding
Most people that are looking for alternatives to payday loans need cash fast. That may make crowdfunding a moot point.
Crowdfunding is the process of raking in money from multiple people online with the promise that you’ll pay them back with interest or other rewards. There are some platforms (Kiva for example) that give people funding without the contingency of interest payments.
The issue with crowdfunding is that, depending on the platform you use, it can take a while to amass loan funding. You’ll also probably need to meet certain income and credit thresholds.
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- Use a Credit Card
Credit cards have gotten a bad rap as being destructive. It’s true that a credit card used irresponsibly can cause issues. What’s also true though is that credit cards represent a free way to borrow money for a month and may even pay you to borrow!
How does that work?
When you use a credit card, you start to accrue a balance. At the end of the month, that balance comes due on whatever your specified due date is. So long as you pay your balance in full by your due date, you won’t owe your card company a penny.
- Retirement Loans
For those of you that are lucky enough to have a retirement plan, you can borrow from it in a pinch. Most plans allow you to withdraw from them for a certain amount of time without incurring penalties.
If you hold onto your borrowed money beyond your allowed period, you will incur steep early withdrawal fees. There are a small handful of instances where withdrawal fees can be waived (buying a home for example).
- Paycheck Advance
Not every employer will be open to giving you a paycheck advance. If yours is, it’s a free means of getting your hands on the cash you need.
Your HR department can inform you of whether or not getting a check advance is a possibility. If it is, they will walk you through what the process of getting your paycheck ahead of schedule entails.
For smaller companies without an HR department, you’ll need to strike up a deal with your boss directly to get your hands on your money early.
- Online Lenders
There are several easy online loans you can access through your web browser or mobile applications. The trick is to make sure that the online lender you choose is legitimate and not as predatory as local payday loan lenders.
Before taking out an online loan, read all terms surrounding your borrowed money carefully. We’ve seen people fall into the trap of bad online loan terms many times and don’t want you to suffer that same fate.
There Are Several Alternatives to Payday Loans Available to You
The alternatives to payday loans we’ve presented in this post scratch the surface of everything that’s available. We hope those samples of what your options are got the wheels turning in your head and ultimately move you towards a quality lending product.
8 Smart Alternatives to Payday Loans
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