Payday loans are becoming more and more popular, unfortunately. If you have ever been in a bind, you might know the temptation. These places tend to make things just get worse. So, if you really need help, what should you do?
What Are Payday Loans and Why Should You Avoid Them?
First, we need to understand what we’re talking about. Payday loans are a type of short-term loan, usually given to those with poor credit. When people need money now, they don’t have a whole lot of other options.
Bad credit scores limit you severely. However, don’t fall for the trap. These types of loans carry punitive interest rates, costing far more than they should.
For people in tight situations, these often compound their issues. They wind up stuck in a cycle. Struggling to pay off a payday loan isn’t fun. The best way to avoid that would be to avoid taking them out in the first place.
Speak to Your Local Credit Union
Have you opened an account with a credit union already? If so, they can often be the best places to look. Speak to them about your situation. A lot of credit unions offer their own short-term financing options. Best of all, they’ll almost always have better terms than what you’d find at a payday loan place.
Short-Term Cash Loans
These types of loans can have repayment periods of as little as 30 days. However, you can find them with terms of up to a year. The longer repayment periods keep your monthly obligations low. Plus, on top of the lower monthly payment, most credit unions offer far better interest rates. Compared to a payday loan, they are a steal. In any event, asset based lending will get you better rates and save you from collection nightmares without collateral.
Lower Interest Rates
Don’t take out a payday loan when there are other options available. With lower interest rates, these will be far less burdensome. You can pay them off over a longer period of time. Plus, even though it takes longer to repay, you’ll spend less overall. Lower interest rates are what makes that possible.
Don’t Shy Away From Community Support and Charities
Perhaps, the simplest solution of all would be to visit your local charities. If all you need is some food to last for the week, these places can help you out. Not everywhere has the same access to community support, though. You’ll have to search around to see what’s available in your local area.
Finding Support in Your Community
The internet is an amazing tool. We’d recommend using Google to search for local support groups. Churches often provide meal assistance to those who live in the area. Even a little help can make the difference when things are really stretched thin.
Look Into the Gig Economy
Suppose your problem is a bit more persistent than something local charity can support. In that case, you might be better off finding a way to bring in some extra income. Gig economy jobs are readily available in today’s economy. You could start delivering food or packages. That way, you won’t have to stretch your budget so much. Instead, you’ll simply enlarge it.
Use the Extra Income to Get Ahead
Once people start to pull in more income, their lifestyle often inflates. It doesn’t take long before it matches their new income level. Instead of doing this, you ought to use the extra money to pay off your debts. That way, you’ll lower your overall monthly obligations in the long run. If you do that for a while, living could get a lot less expensive.
Ask a Loved One for Help
Emergencies aren’t something we can all plan for. Sometimes, things just happen. If you find yourself in a sticky spot, don’t be afraid to ask your family for help. That’s what they are there for. Now, if you start asking them for help all the time, you might become a bit of a burden. Still, if it’s only a one-time thing, then how much would it hurt to ask?
Paycheck Advance Apps
For small amounts, certain apps could meet your needs. These let you borrow amounts up to $100. Plus, they don’t charge fees all that often. So, if you are in need of cash right now, these could be what you’ve been looking for.
How to Find the Best Alternatives to Short-Term Loans
Payday loans are found all over the place. However, despite their prevalence, you should avoid them at all costs. They charge such excessive fees they are more of a burden than anything else. There are other options you could pursue. Whether you get help from your family or a charity, you could find a way around all this. By avoiding payday loans, you can save yourself a lot of pain.