If you’re like most people who don’t have a ton of extra cash lying around, you might find it tough to come up with the money when unexpected expenses pop up. That’s where payday loans come in.
Payday loans are a type of short-term loan that can help you tide yourself over until your next paycheck. They’re typically easy to qualify for and can be a quick way to get cash when you need it. However, payday loans come with a high price tag. The fees and interest rates associated with these loans can often make them more expensive than other options.
Fortunately, there are some alternatives to payday loans that you may want to consider. Here are a few options that can help you get the cash you need without breaking the bank:
Credit Union Loans
Credit union loans are more like a category of loans you can get from a credit union. A credit union is an organization that helps its members be more financially stable by giving them access to products and services similar to those offered by traditional banks.
You technically own a small portion of the organization if you’re a credit union member. However, before becoming a member, you must meet common criteria like being in the same HOA, church, or PTA.
That said, what are the advantages of being in a credit union? As mentioned earlier, a credit union can give you access to financial products like loans. If you’re a member, it means that you’re also financially contributing to the group, which gives you favorable terms regarding the interest rates on the loans you get.
In addition, credit union loans has fewer requirements for qualification. Even if you have a very bad credit score or don’t have a credit history, you still have a good chance of getting a loan with favorable terms.
Credit Card
This seems counterintuitive, but using a credit card is better than getting a payday loan if you handle it properly. Unfortunately, some people tend to spend a lot more when handling a credit card, which gives credit cards a kind of a bad reputation. However, one advantage of a credit card is that they often have rewards and cash back programs that let you redeem points for rewards.
A credit card is a short-term loan that must be paid back before the balance is due. The issuer will give you a credit limit when you get approved for a credit card. This credit limit will be reduced based on your spending and will only return to its original amount when you pay off your balance.
Credit card companies often have a grace period where you pay your balance in full without paying any interest. That’s a great feature many users have come to love.
Personal Loans
If you have a great credit score, you’re better off opting for a personal loan. A personal loan is a flexible type of loans, which is fast and easy to get. Unlike a credit card, a personal loan will give you the money in cash or via a direct transfer to the bank. The interest rate is often negotiable, but the process involves fees.
Usually, personal loans are fixed-rate, meaning the interest rate will stay the same throughout the repayment. However, you can also opt for a variable rate if you think the market will lower the interest rates of loans. But the market, at best, fluctuates every month. So, you’re better off paying for a fixed-rate loan.
Also, they are just as popular as payday loans that you can get anywhere. Whether you’re looking for a loans lender Dover, DE or in California, you can easily find one.
Home Equity Loans
A home equity loan is an installment loan that you can borrow against the equity you have in your house. The amount of money you can borrow for your equity loan is based on the difference between your house’s value and the remaining balance you have in your mortgage. It mostly works as a mortgage; hence, people call it a “second mortgage.”
However, they often have better loan terms, such as lower interest rates and bigger borrowing limits. However, take note that when you can’t pay off your mortgage, there will be a chance that you will lose your house. That said, it’s still a good alternative to payday loans.
Credit Card Cash Advance
Although credit card cash advances are not cheap, they are still better than payday loans because they give you a higher risk of remaining in debt.
A credit card cash advance lets you borrow against your remaining credit limit on your card in cash. Using this option is easy because you only have to remember your PIN and get your cash advance from a nearby ATM.
Final Words
Although payday loans are fast and convenient, they are not the safest and the cheapest in the market with their triple-digit APR (annual percentage rate). That said, if you’re looking for a better alternative, try out at least one of the alternatives given above. However, just remember that they are highly situational, so you should do more research beforehand.
