Here are some alternatives to payday loans
Payday loans are easy to get but expensive to pay back. They are one of the most expensive online financings. The interest rates on payday loans are higher than that of any conventional loans. Some people may qualify easily, but if you don’t you have several other alternatives to choose from. To overview, you could borrow a different type of loan like a personal loan, borrow from friends and family, get an advance from work, use a credit card, use emergency funds or borrow from your insurance policy.
Here are some few alternatives when you do not qualify for a payday loan:
A Personal Loan
A personal loan is a loan which offers you more money, but you have longer to repay it. With a payday loan, you have to repay it out of your following wage whereas, with a personal loan, you have to pay monthly instalments for up to 6 years. Although it is the same concept as a payday loan, you might find it a lot easier when it comes down to repayments.
You can borrow your friends and family
Your close friends and family will provide you with the loan you need almost instantly when you have a financial emergency. One advantage of getting your loan from family is that they will offer you the money without too much screening. Also, most friends and family do not impose any interest rates on your loan.
Ask for an advance from work
Some companies offer an advance for their employees. If your company allows it, you can take an advanced salary. Taking an advance is a smart option if you do not have too many commitments to your salary. The other advantage is that you will not have to pay it back. At your next salary, the company deducts the amount you took out as the advance. Remember to use the money wisely so that you won’t have to ask for another advance.
Your credit card can work as a loan option
Credit cards may be hard to get, but they are not as risky as payday loans. You can apply for a payday loan instead of taking a credit card. This is a good loan option if it is not an immediate emergency. You can have the credit card within two weeks. To keep your scores safe, ensure you pay your credits on time.
Dig into your emergency funds
Sometimes, your savings may come in handy when you have an unplanned situation. You can use them for emergency situations and save up later. There is no paying back this money and best of all there will be no interest because this is your money.
You can borrow from your insurance policy
Saving on a life insurance policy or retirement benefits can be beneficial. When you have a financial emergency, you are allowed to borrow a loan from your plan. Some loans do not have a repayment deadline and if you do not pay it back, the lender will deduct it from your benefits. The insurance loan is to be paid back in full with accumulated interest. Ensure you borrow an amount you can afford to pay back.
Payday loans are meant to be financing for emergency situations. You should avoid them at any cost, especially when you need financing for leisure activities. Remember, they have a high-interest rate and can lead to a poor credit score if not paid on time.
Next Post: Payday Loans vs Short Term Loans