What is a Payday Loan?
Payday loans seem nice at a glance, but they can get you in a bit of a bind. Lenders create these loans for low-income borrowers who need money until their next payday. The loans get paid back when you get your next paycheck.
It’s very typical for people that get a payday loan to get one for the length of two weeks. Yet, some of these loans can last up to a few years.
Why Should I Get Out of a Payday Loan?
Sometimes, payday loans can be a nuisance for your financial situation. Since some can last for more than the length between paychecks, you could end up having to pay more than you want to.
Also, some of these loans can have high interest rates. Taking a financial hit with the higher interest rates is a solution to get some quick cash to cover an expense. Yet, it would hurt you down the line.
This could also damage your credit score. When viewing your credit history, lenders would be able to see that you’ve taken a payday loan out before.
Different Solutions to Payday Loans
Here we have a list of alternatives to payday loans for you. There are many options for you out there; make sure you do ample research.
Borrowing from a Credit Union
Credit unions are a solid solution for those that are part of a credit union. Being in good standings with a union is important to the success of borrowing from one.
Credit unions don’t only look for a good credit score to see if you apply for a loan. Instead, they look at your standing with the company, your income, and your credit history. These aspects will help them decide if you qualify for a credit union loan.
Asking for an Advance in Your Pay
If you’re close enough to your employer, an advance in your pay is an excellent solution. Being honest with them and explaining your situation could be very beneficial. Many employers will help out their employees if they have a history of being reliable.
You could also then offer to put in more hours at your job in return. Not only would this help your working relationship, but you would also get more money coming in.
Applying for a Bad-Credit Loan
This alternative is great for those with lower credit scores. Bad-credit loans are useful when your debt is higher than your income. Lenders look for these two qualifications to see if you’d be able to apply for one.
Asking for Help
Sometimes there’s nothing wrong with asking for some help. You could try contacting a friend or family member and explaining your situation to them.
This could be a great solution, as you could set the terms with your contact on how you will be repaying them.
Wrap-Up
Payday loans can be helpful, but aren’t very effective. Finding alternative solutions to them could improve your finances and make your life much easier and less stressful.