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Payday loans with low-interest rates can be attractive when you need cash fast and without hassle. Is it the only option?

Payday loans are deemed “predatory” by the Center for Responsible Lending. The ease with which online payday loan borrowers can access funds to help them get to their next paycheck often causes severe financial hardship.

The CRL reports that the average annual percentage rate for a payday loan is 391%.

High-interest rates make payday loans problematic. Renewals are even more dangerous. The Consumer Financial Protection Bureau warns you that payday loans can be rolled over in many states if you cannot repay the loan on time.

You would pay only the fees due on the loan while the due date is extended. The renewal fee or rollover fee would be added to the original amount. This creates a vicious circle of costly debt.

Payday advances are not your only option when you’re in financial trouble. These are 11 options to consider.

Create a payment plan

Be cautious before you decide to take out a payday loan.

Seek out ways to work out a deal if a credit card bill or loan payment affects your ability to pay basic expenses.

Many card issuers offer programs to help you temporarily lower or suspend your payments if you cannot pay. Alternately, your card issuer may agree to lower your interest rates to make it easier to manage your payments.

Your lender will likely accommodate your request if you have been a loyal customer in the past. It’s best to tell your lender everything.

Apply for a Personal Loan

Although banks have a bad reputation for slow processes and red tape, it is worth looking into your local financial institution if you are in dire need. A personal loan from a credit union or bank could be cheaper than a payday loan if you have a specific need.

These are more like a traditional borrowing arrangement. You’re getting money to pay for something you need, such as a purchase or refinance. And you’re going have a repayment plan,” Andy Laino, Prudential’s financial planner, says.

You don’t have to limit yourself to brick-and-mortar institutions. SoFi and Earnest let you see the rates and terms you are eligible for without requiring you to do a credit check.

Although these personal loans are not available immediately like payday loans, they can be funded in a matter of days if approved.

Laino states that personal loans are best for consolidating debt. They can be used by people who have significant medical expenses or know they will need to make home repairs at a fixed cost. A personal loan is best for those with more specific projects or expenses.

Tap Your Home Equity Line of Credit

Howard Dvorkin is a personal finance expert and chairman of He says homeowners may be eligible to receive a low-interest line of credit that is tax-deductible.

He says that this is an excellent way for people with a steady income to get quick cash. Average HELOC interest rates hover around 5%.

You should exercise extreme caution when using your home as leverage to get quick cash. Dvorkin states that tapping into home equity can put your home at risk for those in financial trouble.

A Payday Alternative Loan is available with Low-Interest Rates

Some credit unions offer payday alternative loans with low-interest rates.

These loans can be obtained for between $200 and $1,000 with terms of up to six months. According to, the issuing credit union may charge a $20 application fee. To be eligible for a PAL, you must be a member of the credit cooperative.

Payday alternative loans may still have high-interest rates, but keep in mind that they can still be very expensive. Thankfully, PAL interest rates can be capped at 28% under law.

Get a Cash Advance on a Credit Card

A credit card cash advance is not a good option. However, it is likely to be cheaper than a payday loan. Most issuers charge a percentage of the advance fee. This is usually between 5% and 10%, with a minimum of $10. Cash advances have an average APR of 25%.

It is essential to pay the advance immediately so that you don’t get over-extended with interest. Credit card cash advances do not accrue interest like balance transfers or purchases. Your short-term loan can spiral into long-term debt if it is allowed to accumulate month after month.

Ask your employer for a paycheck advance

A payday advance could be the solution to your short-term cash flow problems. These types of loans are not available from all companies, and terms can vary. It is essential to understand that an advance is a loan that you must repay according to the agreed-upon terms.

Apply for a Paycheck Advance

An app is a better option if you don’t want your company to be involved in your financial affairs and have a steady income. Earnin and Brigit offer a flat rate of 1% interest to cover a portion of your next paycheck. Although fees are minimal, some apps allow you to tip freely.

Borrow from Your 401(k)

You can tap into your workplace’s 401(k) as well as your paycheck. Traditional advice would advise you to run for the hills before you take money from your retirement account. However, a loan may be an option if you are truly stuck.

You don’t have to pay taxes if you borrow against your 401k. This means that you must repay the loan on time or fully if your employer terminates your employment.

You don’t have to pass a credit check, and interest is paid back to your account. The impact on your long-term results should be minimal if you repay the loan in a reasonable timeframe.

Keep in mind that you may not be allowed to make any new contributions to your retirement plan while repaying the loan. This could slow down your progress towards building a retirement nest egg.

Visit a Pawnshop

Pawnshops can provide secured loans without a credit check and with no lengthy application processes. By putting up collateral, you can get cash immediately.

Your collateral will be returned to you once you have repaid the loan and all fees within the stipulated due date. You lose any asset pawned if you fail to repay the loan on schedule.

Remember that borrowing from a Pawnshop can be expensive. The interest rates vary from 12% to 240%, depending on the state.

The loan may also include storage or insurance costs. This is a benefit because if you cannot repay it, you can leave the loan without any additional fees or credit damage.

Use a Peer-to-Peer Lending Platform

Peer-to-peer lending is a way to get quick cash. It involves matching you with investors via a lending platform such as LendingClub, or Prosper.

These platforms allow investors to review all available loans and choose which one they wish to fund. The investor pays interest in return. A small origination fee may be required.

If you have excellent credit, interest rates for P2P loans are often very low. LendingClub offers a range of 10.68% to 35.89% APR.

LendingClub’s application process is typically simpler than that of a bank. There are other benefits to P2P lending. Dvorkin states that a peer investor might be more understanding than a traditional bank.

Ask your family or friends

If you are worried about getting deeper into debt because of fees or high-interest rates, consider speaking to a friend or family member who can provide financial assistance.

Although this option is not easy to use, it could be worth considering if you don’t have to pay the high interest and fees associated with a payday loan.

However, borrowing money from a friend can make a personal relationship into an enterprise. It is essential to accept that you will be indebted to the person. If you don’t uphold your end, the relationship can turn sour. You should not lend more than you can afford.


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Author D Laidler

I am David, economist, originally from Britain, and studied in Germany and Canada. I am now living in the United States. I have a house in Ontario, but I actually never go.  I wrote some books about sovereign debt, and mortgage loans. I am currently retired and dedicate most of my time to fishing. There were many topics in personal finances that have currently changed and other that I have never published before. So now in Business Finance, I found the opportunity to do so. Please let me know in the comments section which are your thoughts. Thank you and have a happy reading.

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A personal loan is a medium term loan with a fixed interest rate that is repaid in equal monthly payments and it's usually limited to 24 months. Loan offers and eligibility depend on your individual credit profile. Our lenders can help you obtain as much as $3,000 depending on the lender, your state and your financial situation.

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