Alternatives to Payday Loans
Payday loans are pretty tricky. They can be helpful in tight situations, but they can also be very dangerous. It is usually advised by financial professionals to stay away from them because of such high interest rates. Whether you don't want a payday loan because of the possible implications, or you can't qualify for one, there are several alternatives.
Home Equity Loans
If you own a home, you may be able to borrow against the equity in your home. The equity is the market value of your home minus the amount you still owe on your mortgage. If you owe $100,000 on your mortgage for a house worth $250,000, your home equity is $150,000.
A home equity loan or a second mortgage can give you money you need, but it isn't as fast as a payday loan. Also, it can add several more years on your mortgage. If you have some time before you absolutely need the money, talk with your mortgage provider about a home equity loan.
Personal Loan
Personal loans are available through banks and many other institutions. If you have good credit, you can secure a personal loan in a fairly short amount of time. The benefit of a personal loan is that it will typically have much lower interest rates than payday loans.
Payday loans have very high interest rates, and if for some reason you can't pay it back right away, the interest will build up fast. With a personal loan, you can still pay it off in full before it's due, but if you need some extra time to get the money, it won't build up nearly as much interest.
Credit Cards
Credit cards are always an option. If you need cash fast, you can use a card you already have or apply for a new card. If you're buying an item from a store, getting a store card with them might secure you a good discount as well as the credit you need.
Credit cards are okay for emergencies, but don't use them for large amounts unless you absolutely have to. While the interest rates usually aren't as high as payday loans, they can still be very high costing you a lot in interest. Try to pay off the balance as soon as possible.
Borrow from a Friend or Family Member
If you have good rapport with a friend or family member that you trust and who trusts you, they might consider lending you money when you're in a bind. This could potentially be interest-free cash, depending on how it's done.
While borrowing from someone you know can be a life-saver, it can also be a relationship killer. Be prepared to pay the money back as soon as possible. If you don't think you can, save your relationship and try another method. Talk with them about the terms of the agreement, and make sure there is complete understanding between both parties.
Save Money
The best way to keep from falling into financial problems is to have savings. Building an emergency fund worth at least 6 months of living expenses set aside in a savings account can save you in many financial situations such as job loss, medical emergencies, car fixes, etc.
If you're in need now and you don't have any savings, obviously this tip won't help you at the moment, but it is good motivation to start saving for the future. Build up an emergency fund now and you can avoid the need for payday loans and alternatives loans later on.