Alternative Financing: 3 Options If You’re Tired of Payday Loans
Acquiring quick financing can be a struggle sometimes, as even the fastest loan available in the market may take up to a week. However, among those options, probably the quickest type of loan you can get is a payday loan.
If you’re short on cash and are in dire need of financing, a payday loan might be at the top of your options. But in reality, there are only a few good reasons you should get a payday loan as its cons vastly outweigh its pros. But what are payday loans, and how do they work?
What are Payday Loans?
A payday loan is a short-term loan meant to be paid back on your next payday. The amount of money varies in amount, but they typically go from $50 to $1000 depending on the lender.
No matter how big or small your loan amount is, the typical APR of payday loans is triple digits, so people avoid them. However, there are a lot of options available online as online lending is getting more and more popular these days. It makes it easier to get different loans wherever you are. For example, if you’re looking for Hamilton personal loans or payday loans from California, you can just scour the internet for reliable and trustworthy lenders.
Also Read:- Know everything about Instant Online Payday Loans
The laws surrounding payday loans are finicky at best. Some states limit the amount of money you can get from payday loans, while others outright ban their access.
It’s completely understandable, though, as many people are struggling to repay their loans. However, even if this is the case, due to its quick and easy financing, payday loans continue to be the most common type of loan US citizens take. If you’re looking for a good alternative to payday loans, here are some of them.
Credit Union Loans
Credit unions are community-based organizations made by the members for the members. If you are a credit union member, you own a small percentage of the organization, and it’s typically forbidden to get more of the organization’s stocks. Credit unions offer the same loan products and services that a traditional bank does, like ATM access, different types of loans, direct deposit, etc.
Typically, for a person to be a member of the organization, they must share something in common with the credit union, like being a member of the same PTA group, a fellow churchgoer, in the same HOA, etc. The primary difference between a bank and a credit union is that the profits of credit unions are usually passed down to their members.
For example, when the organization manages to get some savings, it will be shared with its members through loan discounts, lower interest rates on loans, higher interest on savings accounts, etc. So why are credit union loans much better than payday loans? First off, they have a much lower interest rate.
Credit unions promote the financial well-being of their members, and thus, the members often get favorable terms on loans. Also, credit union loans have more forgiving qualifications. Some even prefer not to do a credit check on their members and only do so when necessary.
Cash Advance
You can access different types of cash advances, but if you have a credit card, a credit card cash advance is a better alternative than payday loans. It’s a short-term loan against your credit from your account. Although cash advances have a hefty fee for taking out an advance, banks typically have a grace period where their clients can pay their balance in full without paying any interest.
There are a few ways to get a cash advance from your credit card. If your credit card has a PIN, you can just go to a nearby ATM and withdraw a cash advance from your account.
Otherwise, you’ll have to go to your bank and request a cash advance personally. Or, if you have a convenience check, you can use it to either withdraw or deposit money from your credit card account.
Pawn Loans
If you have something valuable that you don’t need currently and can let go of for a little while, you may try out pawn loans. Interest on these loans is usually as low as 200% compared to payday’s 400%. Although they are quite an expensive loan to get, they are very easy, and you can even get your money on the same day.
To get a pawn loan, all you need to do is to go to a pawnshop with your valuable item and have them assess the item’s value. After a little evaluation, they will make you an offer with the item as collateral, and you can negotiate. Once you agree, you will be given the loan and a ticket, which you will need to get your item back.
Final Words
Payday loans are fast and easy to get, but they are not necessarily the best and only option. If you’re looking for an alternative, you should try out the above options. However, remember that they are highly situational, so you might want to do a little research before going through with one of them.
