A payday loan is a small, short-range, and unsecured loan where scheduled repayment is when you receive your next paycheck. Usually, verification of income and employment takes place, and the amount you can borrow will depend on your income level.
Although payday loans are beneficial when you need fast cash, interests incurred in this type loan are relatively high. There are several fast payday loan alternatives are widely available that you might want to consider before getting a payday loan. Let us take a look at each of them:
Short Term Installment Loan
Unlike a payday loan, an installment loan is a type of loan that is repaid over a longer period of time, usually in six months to 2 years,with a set fraction of scheduled payments.
Personal Installment Loan
personal loan has several advantages compared to having a payday loan or a short term installment loan. Aside from an installment option, personal loans don’t require collateral and don’t have mandatory arbitration.
The Credit Union
Most credit unions have cash advance provisions or overdraft protection which offers interests that are less expensive than that of payday loans.
Credit Card Cash Advance
Although credit cards have high annual percentage rates, interests on credit card cash advance are still relatively lower than that of a payday loan. Different banks have different rules some of which send blank checks, while others allow you to withdraw cash directly from an ATM.
Online Lending Options
There are peer-to-peer lending websites, such as LendingClub Corporation and Prosper Marketplace, that offer other loan preferences that are less costly than payday loans.
Some employers, mostly those in the small business sector, grant paycheck advances to their employees. You ask the owner, or the human resource sector (in the case of a large company) if they give cash advances. Paycheck advances don’t incur interests since this is a part of your future salary being given to you in advance.
Another loan source you can consider, especially when you own valuables such as jewelry, gadgets, designer bags, etc. You can pawn your item at a local pawnshop and get money in return, where you can also get your item back once the loan has been repaid.
There are more ways to get fast loan alternatives like emergency assistance, retirement accounts, and getting loans from friends and family. But nothing will beat setting aside a specific amount every month and commit to setting up an emergency fund you can rely on every time you find yourself short of cash.