How to Find a Payday Loan Alternative
Understand why you should avoid payday loans., Know how much you need., Create a budget for yourself., Check your credit score., Meet with a credit counseling or financial advisor., Talk to an attorney about bankruptcy if need be., Look up your...
Step-by-Step Guide
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Step 1: Understand why you should avoid payday loans.
Payday loans are small (generally $500 to $1000) cash advances that come with very high interest rates.
The loan generally has to be paid back by your next payday, which usually gives you two weeks to come up with the money to cover both the loan and the large fee the company tacks on.
When people cannot pay back their payday loans on time, the company charges another very high fee, and continues to do so until the debt is paid back in full.
This vicious cycle is often called a 'debt trap'. -
Step 2: Know how much you need.
There is no sense in getting a loan of any kind for $1,000 if you only need $200 to get by.
That is just more money that you will owe in the future.
Assess your current financial situation and see what you logically need to get by.
Make a list of your expenses and tally them up.
Determine how much of those expenses you can pay for with the money that you are currently making.
The leftover amount is the amount you may have to get a loan for. , When you are facing a time of financial hardship and debt, it is important to be very smart with your money.
Take a look at what you are spending money on, and cut out the things that are not necessary.
Take the money you save by cutting these unnecessary things out and use it to pay off debt that you have.
For instance, if you know money is going to be tight for the next couple of months, consider cancelling your cable plan for your TV, or putting your hobby to fix up that old car you don’t necessarily need. , This will make a big difference in the kinds of lending you can look into.
Use a free credit score site to view your credit score online.
Make sure you look at all three credit bureaus:
Experian, TransUnion, and Equifax.
If you have a score below 600, your lending options will be limited.
However, you should consider talking to a credit counselor about ways to remedy your bad credit.
If you have a score above 700, you can get just about any loan you want.
Before you apply for a loan, ask about your credit situation to see if you qualify.
If not, look elsewhere. , These advisors may be able to help you create a payment plan for any debt that you currently have.
You can also talk to these advisors about creating a suitable budget for yourself.
You can often find credit counselors that will charge little, if anything at all.
Go online and run a search to find out what credit counseling options are available in your area.
There are also credit counseling hotlines that you can call if you would prefer to speak with someone over the phone. , If you are already wrapped up in a payday loan, an attorney may be able to help you decide if you should file for bankruptcy, or if you simply need a little help to figure out a payment plan.
Attorneys can also double check that the payday lender has been following lawful practices. , In the United States, different states have different laws concerning what payday lenders can and can’t do.
These laws also govern how much interest a payday loan company can charge for their loans. , If you are dealing with a debt, it may be a good idea to simply talk to your creditor and see if you can work out a payment plan that suits you both.
Some creditors are willing to accept partial payments for debts if you work with the creditor to create a payment plan.
However, be sure that you can stick to this payment plan.
This payment plan may involve you paying smaller amounts of money over a longer period of time so that you do not need to take out a payday loan in order to be able to pay off your debt right away. , Before you go get a payday loan, talk to family members or friends that you trust to see if they will loan you the money that you need to pay off your debt or cover your expense.
Having a friend lend you money will ultimately be a less stressful experience, and your friend is likely to charge you a much lower interest rate. , If you need more money, try to find an extra job that will help you to earn the money you need until you have paid off your debt.
You could also talk to your boss about your situation—he or she may be willing to give you more hours so that you do not have split your time between their employment and someone else’s.
You can also apply for temporary positions or gigs that only need you for a limited amount of time.
These side projects may be able to help you get the money you need without having to take on a second job.
Websites like Craiglist list gigs in your area. , Another way to get money quickly aside from getting a payday loan is to ask your boss to give you your paycheck early.
Because this is truly an advance for the work you have done, rather than an arbitrary loan, you will have the benefits of getting the money you need quickly, without the interest rates that payday loan companies charge. , If the thing that you need money for is not incredibly pressing, put it off until you have a little leeway with your finances.
For example, if your car is in need of repair, consider riding your bike to work until you can afford to pay for your car’s repair without needing to take out a loan. , Some community programs and social service programs offer emergency assistance for people within their communities.
However, these programs often have relatively strict requirements, such as being a United States citizen. , Get a credit card with a low interest rate so you don't fall too far into debt paying off the balance.
You may also be able to get a credit card cash advance from a credit card consumer company.
You can also look into getting a secured credit card.
This is a credit card that is linked to your savings account.
The amount that you can charge to the credit card is linked to the amount of money in your account.
After a certain period of time (each company is different) you may be able to get an unsecured card when you use your secured card wisely. , Credit unions are usually more lenient than banks, so you will have an easier time getting a loan this way. , To keep yourself from falling into any sort of payment trap, there are certain details that you should look for when considering taking out a loan.
These details include:
The loan should not have a personal check mechanism.
There should be a limit on how many renewals you can get.
The loan office should meet with you to make sure that you will be able to pay back the loan, and should offer counseling.
There should be a roughly 90 day repayment term (this means that you should be able to pay back the loan over the course of 90 days, though you should not have to pay the loan back all at once). , Consider the monthly payments, interest rates, application fees, and more.
Make sure you can afford whatever you are applying for. , The sooner you can get out of debt, the better.
This will improve your credit score and minimize the money you pay over time.
Being able to pay off your loan quickly goes back to Part 1 of this article—you must make sure to create a budget for yourself and spend your money wisely while you are repaying your loan. -
Step 3: Create a budget for yourself.
-
Step 4: Check your credit score.
-
Step 5: Meet with a credit counseling or financial advisor.
-
Step 6: Talk to an attorney about bankruptcy if need be.
-
Step 7: Look up your state’s laws regarding payday loans.
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Step 8: Negotiate with your creditor.
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Step 9: Ask your friends and family for support.
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Step 10: Pick up an extra part-time job
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Step 11: or ask your boss for more hours.
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Step 12: Ask your employer for a salary advance.
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Step 13: Put off the expense if you can.
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Step 14: Look into an emergency assistance program.
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Step 15: Apply for credit cards.
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Step 16: Apply for personal loans with credit unions.
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Step 17: Look for important details when considering a small loan.
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Step 18: Compare the costs of loan programs.
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Step 19: Repay your loan as quickly and efficiently as you can.
Detailed Guide
Payday loans are small (generally $500 to $1000) cash advances that come with very high interest rates.
The loan generally has to be paid back by your next payday, which usually gives you two weeks to come up with the money to cover both the loan and the large fee the company tacks on.
When people cannot pay back their payday loans on time, the company charges another very high fee, and continues to do so until the debt is paid back in full.
This vicious cycle is often called a 'debt trap'.
There is no sense in getting a loan of any kind for $1,000 if you only need $200 to get by.
That is just more money that you will owe in the future.
Assess your current financial situation and see what you logically need to get by.
Make a list of your expenses and tally them up.
Determine how much of those expenses you can pay for with the money that you are currently making.
The leftover amount is the amount you may have to get a loan for. , When you are facing a time of financial hardship and debt, it is important to be very smart with your money.
Take a look at what you are spending money on, and cut out the things that are not necessary.
Take the money you save by cutting these unnecessary things out and use it to pay off debt that you have.
For instance, if you know money is going to be tight for the next couple of months, consider cancelling your cable plan for your TV, or putting your hobby to fix up that old car you don’t necessarily need. , This will make a big difference in the kinds of lending you can look into.
Use a free credit score site to view your credit score online.
Make sure you look at all three credit bureaus:
Experian, TransUnion, and Equifax.
If you have a score below 600, your lending options will be limited.
However, you should consider talking to a credit counselor about ways to remedy your bad credit.
If you have a score above 700, you can get just about any loan you want.
Before you apply for a loan, ask about your credit situation to see if you qualify.
If not, look elsewhere. , These advisors may be able to help you create a payment plan for any debt that you currently have.
You can also talk to these advisors about creating a suitable budget for yourself.
You can often find credit counselors that will charge little, if anything at all.
Go online and run a search to find out what credit counseling options are available in your area.
There are also credit counseling hotlines that you can call if you would prefer to speak with someone over the phone. , If you are already wrapped up in a payday loan, an attorney may be able to help you decide if you should file for bankruptcy, or if you simply need a little help to figure out a payment plan.
Attorneys can also double check that the payday lender has been following lawful practices. , In the United States, different states have different laws concerning what payday lenders can and can’t do.
These laws also govern how much interest a payday loan company can charge for their loans. , If you are dealing with a debt, it may be a good idea to simply talk to your creditor and see if you can work out a payment plan that suits you both.
Some creditors are willing to accept partial payments for debts if you work with the creditor to create a payment plan.
However, be sure that you can stick to this payment plan.
This payment plan may involve you paying smaller amounts of money over a longer period of time so that you do not need to take out a payday loan in order to be able to pay off your debt right away. , Before you go get a payday loan, talk to family members or friends that you trust to see if they will loan you the money that you need to pay off your debt or cover your expense.
Having a friend lend you money will ultimately be a less stressful experience, and your friend is likely to charge you a much lower interest rate. , If you need more money, try to find an extra job that will help you to earn the money you need until you have paid off your debt.
You could also talk to your boss about your situation—he or she may be willing to give you more hours so that you do not have split your time between their employment and someone else’s.
You can also apply for temporary positions or gigs that only need you for a limited amount of time.
These side projects may be able to help you get the money you need without having to take on a second job.
Websites like Craiglist list gigs in your area. , Another way to get money quickly aside from getting a payday loan is to ask your boss to give you your paycheck early.
Because this is truly an advance for the work you have done, rather than an arbitrary loan, you will have the benefits of getting the money you need quickly, without the interest rates that payday loan companies charge. , If the thing that you need money for is not incredibly pressing, put it off until you have a little leeway with your finances.
For example, if your car is in need of repair, consider riding your bike to work until you can afford to pay for your car’s repair without needing to take out a loan. , Some community programs and social service programs offer emergency assistance for people within their communities.
However, these programs often have relatively strict requirements, such as being a United States citizen. , Get a credit card with a low interest rate so you don't fall too far into debt paying off the balance.
You may also be able to get a credit card cash advance from a credit card consumer company.
You can also look into getting a secured credit card.
This is a credit card that is linked to your savings account.
The amount that you can charge to the credit card is linked to the amount of money in your account.
After a certain period of time (each company is different) you may be able to get an unsecured card when you use your secured card wisely. , Credit unions are usually more lenient than banks, so you will have an easier time getting a loan this way. , To keep yourself from falling into any sort of payment trap, there are certain details that you should look for when considering taking out a loan.
These details include:
The loan should not have a personal check mechanism.
There should be a limit on how many renewals you can get.
The loan office should meet with you to make sure that you will be able to pay back the loan, and should offer counseling.
There should be a roughly 90 day repayment term (this means that you should be able to pay back the loan over the course of 90 days, though you should not have to pay the loan back all at once). , Consider the monthly payments, interest rates, application fees, and more.
Make sure you can afford whatever you are applying for. , The sooner you can get out of debt, the better.
This will improve your credit score and minimize the money you pay over time.
Being able to pay off your loan quickly goes back to Part 1 of this article—you must make sure to create a budget for yourself and spend your money wisely while you are repaying your loan.
About the Author
Anna Johnson
Anna Johnson is an experienced writer with over 5 years of expertise in museums libraries. Passionate about sharing practical knowledge, Anna creates easy-to-follow guides that help readers achieve their goals.
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