These loans are typically priced at a fixed dollar fee, which the fee represents the finance charge to the borrower. Because these loans have such short terms, the corresponding interest rate and cost of borrowing is very high. In return for the payday loan the borrower will usually provides the lender with a predated check or bank debit authorization.

What is Peer to Peer or Social lending?

This is lending that occurs directly between regular everyday individuals ("peers") without the participation of a traditional bank or financial institution. Interest rates can often be lower than a bank or payday loan. More.

What is a Salary Advance Loan from a Credit Union?

Salary Advance Loans, which are a relatively new loan offering that have been developed by Credit Unions, are a lower cost alternative to receiving cash then the relatively high costs of payday loans. More.

Wells Fargo Direct Deposit Loan.

This product offered by Wells Fargo is not as expensive as the traditional payday loan, but the interest rate is much higher than the credit union products. It is another option to consider if you need short term help with paying unexpected bills or money for dealing with financial emergencies. Learn more.

US Bank Checking Account Advance Loan

This is another option to consider if you need funds to pay emergency bills. You can get an advance on your next paycheck, and the rates are not as expensive as a typical payday lender. It is a short term loan product that was created primarily to provide short-term credit needs to people who have unexpected bills. If you decide to use this product, only borrow what you can afford to pay back with your next paycheck. More on the US Bank checking account advance loan.

Fifth Third Bank’s Early Access

This bank is also offering an alternative to payday loans, and the interest rate, while still high, is lower than a payday lender. Click here to get more information.

FDIC Small Dollar Loan

The Federal Deposit Insurance Corporation (FDIC) has created a new small dollar loan product that provides short term, low interest rate loans to low-income Americans, many of which have low or no credit scores. This federal government product is an alternative to high cost payday and salary advance loans. To learn more, click here.

Low Interest Auto Loans from Ways to Work

If you need a car loan, Ways to Work is an organization that offers people with poor or no credit a low interest loan. They focus on auto loans, as the Ways to Work loan program is intended to help individuals remain in or advance in their job, and they understand that adequate transportation is needed to do that. Continue.

Low interest rate Stretch Pay loans

This product is another low interest rate offering that is made available by many credit unions and small regional banks. They can be used to pay emergency bills and expenses. Learn more on stretch pay loans.

Home Equity Loans

A home equity loan is another very effective way to consolidate debt and help pay bills. Find how a home equity loan can help.

Car or automobile title loans

This product will allow people to borrow money against the value of their automobile, and their car is in effect used for collateral for the loan. It can provide quick cash, but there are risks. Learn more on car title loans.

What is a payday loan?

A payday loan is a small, short term loan (the maximum loan is usually about $500-$1,000) that does not require a credit check be completed. Payday loans have very short terms and they must be paid back quickly, typically within several days, or a few pay periods. Payday advance loans usually are marketed as a way to help consumers with paying short term bills until the next paycheck is received. Sometimes also called “payroll advance”, “check cashing”, or “deferred deposits,” these short term loans provide a fast way to access emergency money to help with paying bills. Note that many payday lenders are not bonded, licensed, or regulated at all by those important consumer laws.

How does a payday loan work?

As an example, imagine your car broke down and you then decide to borrow $300 for the car repairs from a payday loan lender. You will write a postdated personal check for $340 (which is the $300 plus a finance fee) made payable to the lender. You will need to submit this information, or enter the information online if you are applying for a payday loan through the internet. The lender will then advance you the $300 for a short, set period, usually 14 days. When that period is up, you need to pay the lender $340 in cash, let them deposit the postdated check you gave them, or you can write another postdated check for the $340 amount plus an additional finance fee. Note, if you do not pay this loan back to the lender in full at the end of the term, you will then be charged an additional finance charge and other fees.

Who uses these types of cash advance loans?

Just about everyone with some type of steady income and a checking account can get a payday loan to use for help with paying their bills or debt. However, this type of loan is generally most common for borrowers who do not have access to savings accounts or credit cards to use this type of lender. Since these loans do not require a background or credit check, people that have credit problems or no credit problems will often turn to payday loans. Recent immigrants and military personnel will also often use payday loans.

What are the benefits of a payday loan?

If used properly, payday loans can be a good way to easily and quickly borrow cash during an emergency if you have no other financial options. As an example of this, you may use a payday loan lender for a temporary and immediate financial need such as a car repair (so you can get to work), medical bill, or another one-time bill. Payday loans are helpful for people who don’t have credit cards or savings available. Because the loans do not require a credit check, they are easy for people with financial problems to obtain.

 

 

What are the negatives of a payday loan?

It is absolutely, 100% crucial that you repay a payday loan immediately, as soon as possible. The way many people get into trouble with these types of short term, cash loans is they are unable to immediately and quickly repay the debt. Why so important? If you cannot repay the payday advance loan at the end of the term, you will be charged expensive additional fees. It is extremely costly to be stuck in a never ending payday loan cycle for an extended period of time, and it can lead to bigger financial problems. Payday loans are also significantly more expensive than some other methods of borrowing money. In many instances the annual percentage rate (APR) on a payday loan will average about 400%, but in extreme cases, the APR can be as high as 5,000%. You need to compare that to a standard credit card that has an APR of 12%. A standard bank loan APR is around 7%. If at all possible, it is always better to use a credit card or, better yet, tap into your savings in the event of an emergency to get needed help with paying bills.

I need help eliminating a payday loan

If you are over your head in payday loan debt, and need assistance dealing with them, you do have numerous options. Some options can include payday loan consolidation programs and using the services of various companies that work with lenders. Find additional ways to deal with payday loans. More.

What about usury laws?

Many states have very created, or are creating, laws that help regulate the lending industry. These are called “usury laws”, and these regulations define permissible lending rates and terms. Some states now also have laws that will regulate the amount a payday lender can lend to consumers as well as how much they can charge for the payday loan. Other states are now banning payday lending outright, such as New York State. Granted, these state laws vary widely. Payday lenders are now often working around these laws and regulations by partnering with banks that are based in other states, such as Delaware. It is extremely important to read the fine print on the payday loan offer, and you need to understand your consumer rights, or get help with your rights.

Should I apply for a payday loan?

Each and every time before you consider applying for any type of payday loan, you need to step back and consider your other options for help with bills.

Be sure to ask yourself if it really is an emergency. As mentioned, payday loans can be helpful for one-time emergency bills such as a car repair or medical bills, but they are not a good idea for funding unnecessary expenses. Ask yourself, is it possible to wait to repair your car or can you wait to pay your bills until your next paycheck? Always remember that a $25 late fee on a bill is much cheaper than a $40+ finance charge for a payday advance loan. Think about some other ways to borrow money to get any help you may need for your bills.

Alternatives to payday loans include :

• Charge the amount of your bills to your credit card
• Negotiate a payment plan with your creditors. More
• Receive a payroll advance from your employer
• Use your bank’s overdraft protections
• A Salary Advance Loan from a credit union. Continue.
• Try to obtain a line of credit from an FDIC approved lender
• Take money from your savings account for help with bills
• Apply for a traditional small bank loan
• Ask a friend or relative to lend you the money
• Ask your creditor for just a little more time to pay a bill
• Use the cash advance features on your credit card
• Peer to peer loans. More.

If you have evaluated these, and any other options you have and still decide an emergency payday cash loan is the best option for you, you need to be sure to understand all the terms and costs before you apply. If you do not understand them, ask for help.

• Look around for a trusted payday lender that offers lower fees and rates.
• Borrow just as much as you know you can pay back to the lender with your next paycheck.
• When you get your next paycheck, your need to make your first priority as paying back the loan immediately.
• Look into a work from home job to help pay off a payday loan and assist with bills.

 

 

What can I do to better prepare for any financial emergencies?

While no one can always predict an emergency, you need to be prepared. Ideally, you should always try to keep enough money to cover your household bills for at least two months in a savings account. If this savings goal is too high, you need to aim to save at least the amount of one paycheck. Also, it is a good idea to have a few credit cards available to you for unexpected costs. If you do not have a credit card now, you can easily search for a credit card online.

Payday loans can be useful is certain situations for consumers who need emergency cash to help pay bills for a short period of time. These loans will come with high costs and numerous dangers. However, if you do have limited options and if you also understand how to use payday loans correctly, many can make the most of these payday loan services, but be careful.