Are There Alternative Options To Consider Other Than Payday Loans?

Payday loans are provided as quick financing option when you are waiting for next paycheck. For a salaried person this type of loans can be a good option. But what if you are not in position to afford such loans? This could be the case if you are in debt and need a way to get rid of it.

Payday loans are definitely not a preferred option for someone who already owes so much. For that person these loans are not going to be a useful option as these carry high rate of interest. Thus it would be wise to look for alternatives which are less costly than these loans.

If you don’t want to lose money by paying off interest then consider having a look at these payday loans alternative before signing at the dotted lines. When interest rates are analyzed it has been seen that interest paid for loans are often higher than what you pay for credit cards. So, it would be better to think about an alternative option which will not burn a hole in your pocket.

Look for a payment plan

It is not that getting a payday loan is the only solution if you are facing difficult with your monthly bills or utility bills. You can manage such tough financial situation by talking to your creditor. In such situations the creditor can help you by providing you the extension that you need.

This means that you have more avenues to check before you take decisions like borrowing. It is most likely that a lender will get ready to offer you an extension. You can search online for various extension options before going ahead.

If you think that you are unable to pay back on time then it would be better to contact your lender immediately. It is going to affect your credit rating if you make late payment. In most cases, lender is willing to help you work out a payment plan.

You can even go for paying small amount of loan if you are not in condition to make lump sum payment. All that you need to do is to have a discussion with the lender. So, avoiding payday loan is not difficult when you have such options to consider.

Try peer to peer lending

Peer to peer lending has become popular these days. You can become a part of lender circle which is basically a group of people who unanimously decide to keep aside some amount every month by pooling it together. This type of funding is accommodated keeping future financial uncertainties in mind.

Mostly this peer to peer lending aims at financing projects or small businesses. Some of them also provide financing for debt consolidation or purposes like so. In the second case your credit history will play an important role in affecting your chances of getting approval.

According to the lending agreement signed by you, one member from the group will get the opportunity to borrow the entire amount one month and another member on another month. You can form a lending circle with your family members or friends. You can even join a lending circle using the online platform. Your payment actions will be reported to the credit bureaus and thus can impact your credit scores.

If possible seek help from family or friends

If you don’t want to get involved in the hassles of borrowing a payday loan then consider asking for financial help from your family or friends. This is another way of borrowing that does not require high rates of interest. Apparently it is easy to approach a friend or a family member without facing the complexity of application process but be careful.

It is advisable to create a loan agreement where interest rates and repayment terms are mentioned. This way you can remain committed towards paying off the loan money on time. At the same time you should also keep in mind that repaying late might affect your relationship with that particular family member or friend.

Make use of your savings

You might not understand the importance of having savings until you face a situation where you need small amount of cash that can be withdrawn from savings. Keeping aside money as emergency fund can save you from any tough financial situation. While you might feel reluctant to get hands on savings, you must know that this can prevent you from falling in the trap of costly payday loans.

It should not be like this that since it’s your own money there is no need to stock up the money again. Make sure to save more than what you spend. This way you will be able to maintain an emergency fund for future needs.

Having savings does not mean that you need to invest huge amount of money. You can start with saving small amount of money which can eventually add up to a lump sum amount of emergency cash.

Ask for advance on your paycheck

At the hour of crisis you may also seek financial assistance in the form of advance on your paycheck from your employer. Although not all employers show willingness in this matter but chances are there that your employer might get ready to offer help. It is more like an advance on salary and not a loan.

In case of this option, your work will be your collateral. It may happen that your employer rejects your application. But there is no harm is asking for such a favor as no interest will be charged.

Opt for credit union alternative loan

If you are finding it hard to get approval for pocket friendly loans then turn to credit unions which provide loan alternative with interest charges that are not too high as traditional banks. But this option will be accessible if you are a member of a credit union. Unlike banks or online lenders qualifying for credit unions alternative loan is to some extent easy.

In this regard it should be noted here that credit unions offer alternative loan not with the motive of making money but to help their members. Thus, it is possible for you to get funds at reasonable price. Applications from bad credit borrowers are also taken into consideration.

It could be a good opportunity for you as financial help provided by credit unions are mainly intended for low income group. Plus, this type of financing does not need you to have stellar credit rating. Apart from looking for favorable financial options, refinancing option is also open for you. All you need to do is to approach your local credit union to find out about available options.

For that matter you can even get your hands on credit union personal loan which can serve the purpose for anything. The best thing is that these loans have interest which is quite low than payday loans. Personal loans are even cheaper than credit cards but may carry high interest if your credit status is not favorable.

Payday loan alternative option offered by credit unions is based on borrower’s income and repayment ability. If you are yet not a member of credit union but want membership then go check out the website of the local credit union to understand the eligibility requirements that you need to fulfill. Based on factors like the place of your living you can even ask for membership extension also.

Consider using a credit card instead of a payday loan

If you are already a credit card user then you can avoid looking for a payday loan by using your existing card responsibly. How you can do so? This is not tough at all. All you have to do is to cut down on expenses which you cannot afford to repay.

Plus, you should try to pay back the balance in full on or before the due date. In this way you don’t have to bother about paying for high interest and charges. This not only helps in preventing late fees but also any harm to your credit scores.

You will be eligible to get 0% APR cards provided that you have required credit scores or above. Best part about getting these cards is that these have interest free promotion period for longer duration. Make sure to pay off the balance before the promotional period expires to keep away interest charges. One thing to be kept in mind is that the interest will start accruing for the outstanding balance.

On the other hand if you are someone who does not have a credit card but wants to own one then good credit scores can make the road smooth for you. Your chances of getting a good credit card with low interest will increase if you have maintained a good relationship with credit agencies. Options are also open for borrowers who are living with the stigma of poor credit.

Make use of whichever option is suitable for you and get rid of debt that has accumulated. There is no point in delaying payment as even low interest on recurring debts can do harm to your credit scores. Don’t forget to determine your credit scores at free of cost in order to make sure which option will best suit you. Cash advance on credit card can also be availed only if you have clear idea about interest which is going to be high due to additional finance charge.

Analyze your debt through credit counseling

If you feel that your financial situation is going out of control then you can look for ways to analyze your debt. Consumer credit counseling could be a great source to help you understand and figure out how much debt you have. This will also help formulate a practical budget for you.

You will be able to see results if you are dealing with a genuine counseling service provider. It is because they will bargain for reasonable rates and feasible monthly payments based on your current situation. It would not be helpful if you are involved with dishonest service provider.

Think of other ways of making additional income

Amplifying your sources of income can help in making more money to support additional needs. Moreover, this is far better than fetching a payday loan which can burn a hole in your pocket. Although adding additional sources of income is not going to be a cake walk for you but there are opportunities available both online and offline.

From among online options you can go for freelance writing, online tutoring, taking surveys, beta testing applications and websites etc. Offline options like selling used things in garage sale, doing a part time job etc to name a few. All you have to do is to be ready to work extra hard and put effort in order to make sure you can make money additionally. This is also one of the most cost effective way to be considered as payday loans alternative.

Summary:

Payday loans seem to be an obvious solution when you are stuck in crisis and need cash on an urgent basis. Although these loans are easy to obtain but you cannot deny the fact that these carry high rate of interest. This loan option should be considered as last resort only when all other options are inaccessible. It is also important to review and compare each option carefully in order to select the best one as per your situation. Preferably the right one would be the most cost effective option for you. Payday loan alternative have come into existence to help borrowers like you to make on time payments that too without paying too much as interest charges. Moreover, financial assistance need not essentially be gathered in the form of a loan. Sometimes getting access to funds from alternative options or even delaying bills may work for you. Take a step towards attaining financial stability by preventing yourself from getting payday loans. It would better to exhaust other sources of urgent financing especially when you are in a tough financial spot.

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