4 Alternatives to Payday Loan

Payday loans are supposed to help us bridge the gap between paydays, but more often they only bridge our debt building, up high interest rates which may average 145%. This means that if you borrow $300 today, you will end up paying around $735 on your next payday. On the other hand, it is undeniable that emergencies happen and that one way or another you might need to borrow money if an emergency happens; however there are cheaper alternatives to payday loans that you may give a go.

• First off, stop for a moment and think. Do you have any item that you could pawn? Pawn houses lend you money over new and used items that you own, applying usually a fixed interest rate over the money lent, which is lower than the interest rate you would pay for a payday loan. Some people get money pawning items that they no longer need, giving them "sold" because they do not plan to repay the money to get such item back. While this is the quickest way to get money, it is not the smarter way even if you want to get rid of something that you no longer need, because you only receive a fraction of the item's estimate cost. Some pawn houses, however, buy your items directly and pay more money than the money they would lend for the same items.

• A better alternative to payday loans is selling those same items yourself. You can use an online auction website such as eBay, or advertise your item for sale on Craigslist and other online free classifieds. However, keep in mind that you need the money as soon as possible, so do not waste your time advertising on each and every listing, but only on local services for a quick sale. Ultimately, have a garage or yard sale this weekend and you will be able to make the money that you would have to borrow to a payday lender otherwise.

• There is a faster alternative to get money without having to pay interest rates; ask your employer for a payday cash advance. Approach the human resource department to find if getting money in anticipation is possible and what are the conditions. The money your employer lends you will be deducted from your next pay check, but some employers lend money over the salary allowing workers to repay partially a fixed amount of money every month. Cash advance from your employer usually will not cause any interest rate because it is repaid with your own job. New employees might not be subject to this benefit though.

• The last alternative to a payday loan that does not involve getting money borrowed is also related to your job. Ask your employer to let you work overtime so you can get the extra cash that you need. Although, this is not always possible, for some people overtime work can do the trick, but if this is not your case, you can still get the money that you need doing a side job, either taking a part-time job or offering your services in your spare time to get that extra cash.

The best of these four alternatives to payday loans is that you will not have to pay interest rates, avoiding any of these simple actions is a debt trap, which is very easy to fall into, but very hard to dig out from.

Author’s Bio: 

Noel Finlay works for FastCash, a website that provides information about quick loans for those who need it.