That decision could make your financial future even more difficult, so try these payday loan alternatives instead.
You’ve probably heard of a payday loan before, but do you know all the details? If not, prepare to be shocked. For starters, payday loans work in a relatively straightforward manner:
- You apply for the payday loan.
- If approved, you get quick cash (usually less than $500).
- You pay the loan back with your next paycheck.
Simple enough, right? Now here’s where payday loans get their notorious reputation: Cost. According to Bankrate, the average payday loan borrower gets $375, which is enough to cover a bill or two. How much are the fees on the typical payday loan? A whopping $520. In other words, your fees are more than the loan, and that puts you into an instant hole.
Despite those high costs, 12 million people get payday loans annually. Unfortunately, only 14 percent can repay them due to the triple-digit interest rates. And if you live in Texas, you’ll be hit hardest, as that state has the highest average interest rate on payday loans (664 percent).
After reading those statistics, you probably realize that a payday loan is not your best move for quick cash. So if you can’t get an interest-free loan from friends and family or an advance on your paycheck from your employer, give these payday loan alternatives a look:
The Top Payday Loan Alternatives
Since every situation is different, here is a list of payday loan alternatives to fit varying needs.
Before signing up for a personal loan, be sure to read the fine print and look for reviews. And if possible, try getting a personal loan from a credit union, as their rates may be the lowest, even if you have bad credit.
If You Want Flexibility
OneMain Financial is a popular personal loan lender since it charges no prepayment penalties and gives borrowers the option to change their due dates. You can get a personal loan here for $1,500 to $20,000.
If You Have No Credit History
If you are young or have no credit history, you may encounter roadblocks when trying to get a personal loan. With Upstart, a lack of credit history is not a problem since the lender looks at other factors like work experience and education when lending cash.
Not only can you get a $1,000 to $50,000 personal loan from Upstart, but you can also build your credit if you pay on time, giving you the best of both worlds.
If You Have Bad Credit
Contrary to popular belief, you can get a loan with bad credit. And if you repay that loan on time, you can also build your credit.
Lenders that offer personal loans for less than perfect credit include:
- Possible Finance – Personal loans within minutes up to $500.
- CashNetUSA – Same-day funding with loans up to $500.
- OppLoans – Next-day funding with loans between $500 and $4,000.
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