Payday loans are the common alternatives that come to mind when an urgent need for cash arises. Depending on how urgent the need is, often times reflects in the loan amount. It is a short term loan that is fast relatively easy to obtain, but when it comes to choosing between a cash advance at high interest rates and some other costly alternatives, here are a few better payday loan alternatives that can be more of a financial service than any other option.
Option 1: Contact Your Creditors Directly
Before you begin running helter-skelter on how to pay off your financial obligations, the best place to start is directly with your creditors. Discuss and inquire about the possible resolutions, penalties, and extensions that could come to play in order to allow you pay at a later or more convenient date. Some financial institutions have certain penalties for default in payment that could be an extra charge on due fees or increased interest rate on that payment. For instance, it’s advisable to weigh in on the mathematics and compare the costs of a payday loan and interest to an extra interest charge on your current debt. Communication is very vital and it should be something you can do with your creditors… Except you are dealing with a mafia group or something. If you have existing payday loans as part of your debt, you may also consider contacting a Payday Loan Consolidation service to help you negotiate better with your creditors. Payday Loan consolidators are able to start an application process towards a debt free life.
Option 2: Borrow from Your Savings
Probably not a good sign of financial discipline but in all honesty, this is a far better option than taking a loan to pay off another loan. Take the time to look at your savings account or emergency fund and see how much you can take from there sparingly in order to reduce your current debt. This is a good idea as long as you commit to replacing the amount you have taken out and help you beat the high interest rate you will incurring with a payday loan. After all, we are meant to save for the rainy days and today might just be a cloudy one. Borrowing from your savings is interest-free but you can decide to commit to a repayment plan and pay yourself interest till your savings are replenished again with interest, win-win situation if you ask us.
Option 3: Contact Your Banking Institution
Your bank already has a detailed knowledge of your accounts, credits, incomes and relevant personal information. This makes them the perfect go-to option for a personal loan if the need arises. You can also request for a credit card or an overdraft that you can use to cover your exposure. Until you ask, you may not know of special discounts or programs that your bank offers to people in your situation. If the terms are right, you might end up saving some money in the process and avoid the rabbit hole of payday loans.
Option 4: Move Your Bank Account
With the growing amount of establishments in the finance and banking sector, you’d be surprised that some banks offer a very fair amount of money or motivation to see you switch banks and move your accounts to them. This offer can be as high as $100, which can come in handy when seeking to reduce or pay off some minor commitments.
Option 5: Sell Some Of Your Belongings
In times when you are pressed for cash, you will be surprised at the amount of money you can make from disposing some of your less used or unused items you own. Sometimes the items may not be unused but perhaps the effects of defaulting overweigh the sentimentality in hanging on to an item for keepsake. Find a camera, take some pictures and post your items on Craigslist, OfferUp or your local classified website. You can even contact a pawn shop or some friends who probably offered money for items you deemed not-sellable earlier. This saves you the interest and effort of securing a Payday loan.
The bottom line is there are a lot of things you could do as opposed to getting a payday loan. One might wonder what exactly is wrong with a payday loan? Quite simply, it is a high interest-short term alternative that usually sees more money flow out of your pockets than any of the payday loan alternatives we’ve listed.
Finally, it is important to reiterate that you should only borrow what you need and propose payment at the nearest period possible to prevent accruing interest and having excess cash than needed in hand, a condition that could translate into overspending and accruing more debt at the end of the day. These Payday loan alternatives will help you avoid paying high interest rates when you may be able to avoid them on your own.
