Payday Loan Alternatives
A payday loan is a small, short – term unsecured loan. The rate of interest of a payday loan is very high. The borrower will get cash, a cheque, or an electronic deposit of funds on the day the loan is taken out. The borrower agrees to pay back the principal plus any interest on the agreed upon date, which is usually the borrower’s next payday. A payday loan is also called a cash advance loan, payroll loan, salary loan or payday advance. It relies on the borrower’s employment records and previous payroll records.
Every year, close to a million people take payday loans. It is usually to cover cash – strapped situations, when people need more money now and have been turned away by other financial institutions because of bad credit history or bad credit scores.
In order to avoid high-cost credit, here is a list os some alternatives to payday loans.
Cashco Flex Loan
Offered by Cashco Financial, with a Flex Loan, you can borrow any amount from $500 to $5000. If you are opting for a payday loan, then you will be able to borrow only up to $1500. The interest rate is low for a flex loan. It is based on an annual percentage of 49.99%. You also have the option to close the loan early without any penalties or make extra payments. You will be able to repay the flex loan via biweekly installments that are flexible to fits your needs. If you have a full – time job, and you have been living in your present residence for at least six months, you qualify for a flex loan. Compared to payday loans, flex loans have a very low APR and fees. Cashco Flex Loans over an easy way to consolidate debts and even rebuild credit scores since they report to the Credit Bureau.
Personal Installment Loan
Instead of going for a payday loan, you can approach a bank, a credit union or any other financial institutions for a personal installment loan (unsecured). The benefits include a minimum 90 – day repayment period, installment option, no mandatory arbitration, and one – time only penalty / late fees.
If you work for a big company, you can check with the HR department whether you can get a paycheck advance. since this is an advance and not a loan, interest rate does not come into play. Of course, it is important that you do not abuse the practice.
Negotiating a Deal with the Creditors
If you are taking the payday loan to pay off your debts, first see whether you can work out a payment plan or negotiate partial payments with your creditors, on a temporary basis.
Credit Card Cash Advance
This is certainly not an ideal solution and is not recommended. Check with you specific bank about their terms and conditions before opting for this.
Life Insurance Loan
If you have cash value in the policy, many whole life insurance policies provide for loans. You can take as much time as you want to pay the loan back. Even if you do not pay the loan back, the insurance company will just deduct the amount from the death benefit.
Credit Union / Bank Cash Advance
A number of credit unions and banks have cash advances provisions or overdraft protection. Compared to an installment loan, it is expensive, however, less costly than a payday loan.
Withdrawing / Borrowing from RRSP
You have the provision to borrow from your RRSP once a year in a time of financial hardship. If you pay it back within 60 days, it will remain penalty free. It is also possible to make a partial withdrawal from the account. Some companies allow their employees to take loans from their pension accounts. Of course, the borrowed money will not be earning any interest.
“Lending Club” and “Prosper” are 2 peer – to – peer lending websites that you can visit to check out cheaper alternatives for payday loans. Also, sites such as “LendUp” offer educational loans, as well as a chance to rebuild a bad credit score.
There are a number of alternatives to payday loans than you actually realize. Check around or resort to the Internet to find out a suitable alternatives for you. You should first check wheather ther is an option where you will not have to borrow further. In the future, set aside a small amount from your pay. It will add up, and help you on the rainy day.