Getting cash fast isn’t always easy when times are tough. You might need money now and have no idea where to get funds.
A payday loan may seem like the only choice. While high-interest loans provide a brief respite, that ends quickly when rates and fees make the situation worse.
If you need cash quickly, there are safe alternatives to payday loans. Better yet, they likely won’t saddle you with additional debt.
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Best Alternatives to Payday Loans
Regulations against payday loans are increasing. Most either cap interest rates or make them illegal. Rates in unregulated states can often reach 400 percent.
In many cases, that can result in a fee of $15 per $100 borrowed every two weeks. So, if you borrow $500, that’s $75 every two weeks.
If it takes you a month to repay the loan, that’s an extra $150 you’ll pay, according to the Consumer Financial Protection Bureau (CFPB).
A missed payment only makes things worse with additional fees. Thankfully, there are other ways to avoid racking up hundreds or thousands of dollars in fees and interest.
Here are the best alternatives to payday loans if you need cash quickly.
1. Set Up a Payment Plan
Many people who seek out high-interest loans aren’t doing it to spend the cash frivolously. If that’s the case, you want to avoid payday loans and reach out to your creditor or service provider.
Explain the situation and ask if there’s a payment plan they can establish for you. Many credit card companies and service providers have hardship programs for situations like this.
You can even do this for medical bills.
It’s tempting to avoid asking for assistance, but don’t avoid requesting help if you need it. Ignoring the problem will make it worse, reducing the odds that service providers and banks will work with you.
Honesty is the best policy and the ideal way to resolve the circumstance. It also will help you get back on your feet.
As you turn your situation around, learn about the recommended budget percentages by category to determine how to allocate your budget for long-term success.
2. Pick Up Extra Work
Getting quick access to cash is one of the top reasons for taking out a high-interest loan. Whether you have a short-term need for money or you aren’t making enough, a side hustle is one of the top alternatives to payday loans.
There are countless side gigs you can do, but you want one that provides money fast. An on-demand delivery app job is a good solution.
Delivering meals for DoorDash allows you to make money quickly and on your own schedule. DoorDash Driver compensation varies depending on various factors.
The service pays drivers weekly and, for a small fee ($1.99), you can request to get paid early if you need money faster.
Read our DoorDash driver review to learn more.
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3. Take Out a Personal Loan
A personal loan may seem like an odd choice and one that may take too long, but it can be a suitable alternative. Rates are typically significantly lower and you can receive funds within days.
A personal loan has two key benefits vs. a payday loan:
- You can pay the loan back in installments
- The interest rate is usually far lower, typically no more than 20 to 25 percent
Online lenders like SoFi let you find loans to help you get back on track. Rates will vary, but they’re often far better than payday loan interest rates.
If you have a credit union near you, ask if they have payday alternative loans. These loans are short-term and available in reduced amounts. Many credit unions offer them to help individuals avoid unnecessary fees and high rates.
There are numerous unsecured loan options available, so it’s important to find what works best for you. Regardless of what you take out, try to pay it off as soon as possible.
Read our guide on the top personal loans available to eliminate your debt.
|Sofi - Fixed Personal Loans with Autopay|
Cost: 8.99% to 25.81% APR*
No fees required. Secure a low rate on loans and kill debt.
4. Start Selling Stuff
If you need money fast, one of the smartest alternatives to payday loans is selling your unwanted items. Whether it’s clothes, electronics, or furniture, you likely have something lying around your house that you can sell for quick cash.
Selling used electronics is a good place to start. Sites like SellCell are a terrific resource to sell devices for top dollar. They provide you with a free shipping label and you immediately know how much you’ll receive.
Do you have other items to sell besides old electronics? Try Craigslist or Facebook Marketplace to sell items locally for cash to help meet your needs.
Read our guide on Craigslist alternatives to identify other choices to sell your items.
5. Credit Card Cash Advance
Taking a cash advance from your credit card isn’t ideal, but it will save you money. Even though credit cards don’t have the best interest rates, it’s a better choice if you can repay the advance within one or two billing cycles.
If you don’t want to take an advance but have a 0% APR credit card, consider using it for an actual emergency. You’ll have at least until the end of your billing cycle to pay off your bill in full to avoid getting charged interest.
Alternatively, if you need funds to pay your credit card bill, a balance transfer card could be a good solution. This will reduce interest charges and help you pay off debt quicker.
Here are some balance transfer cards to consider if you don’t have one and know you can repay the debt quickly.
Remember, credit cards are not free money. Once you get back on your feet, work to kill the debt.
If you don’t want to take funds from your credit card, you could access your pay early through cash advance apps like Dave. These let you take funds from your paycheck early to manage your needs.
6. Ask a Friend or Family Member
Asking friends or family for money is awkward. However, if you’re experiencing financial hardship, you might not have a choice.
If it’s a one-time occurrence and they have the funds, it’s possible they’ll be happy to help. It’s also less likely that someone you know will charge you fees and a ridiculous interest rate just to borrow money.
When using this option, write out an agreement specifying when you’ll pay the money back. Also, don’t make asking friends and family for cash a regular habit.
Money can easily ruin relationships, but showing you’re committed to repaying them can go a long way towards easing their concerns.
7. Tap Your Savings Account
If you’ve exhausted all options and have cash in savings, you may want to withdraw funds from your savings account. We all face emergencies from time to time, which is why we have savings in the first place.
*Related: Have a check you need to cash? Here’s our guide on the best places to cash a check near me to get money now.*
Just remember to replenish the savings if you go this route. It won’t happen overnight, but replenishing your savings account helps you avoid future problems.
As you get back on your feet, commit to saving money. This is an essential building block to financial stability.
CIT Bank is an awesome option to start saving. The online bank pays 1.55 percent in their money market, which operates like a savings account and has the same FDIC coverage. You only need $100 to open an account.
|CIT Bank - start your emergency fund|
$100 minimum deposit requirement
Open a high yield savings account or money market with $100!
High-Interest Loans FAQs
Payday loan companies keep things confusing. Here is some information to know that can help clarify how they work and identify ways to avoid them.
How Can I Get Rid of My Payday Loans?
The easiest way to eliminate payday loans is to pay them off in full. This may not always be possible, or rates and fees may make it difficult to accomplish.
If you don’t have access to funds to get rid of the loans, try to find a lower-rate loan to pay off the high-interest one. This will save you money on interest and likely help you pay it off faster.
Even if it’s a bad-credit loan, you will significantly reduce rates.
SoFi is a good option to find a lower rate loan and alleviate the stress of not knowing how to make payments.
Furthermore, you want to try and end the cycle, even if you’re facing dire financial circumstances. Read our guide on suitable bankruptcy alternatives to help you get back on track.
What Happens if I Can’t Pay My Payday Loan?
Payday loans carry exorbitant interest rates and fees. These both soar if you default on your loan.
In the worst-case scenario, payday loan companies can send you to collections, damage your credit score, and threaten arrest. Keep in mind that the latter is illegal for them to do.
If you’re at risk of default, use one of the options on our list to get current. Then seek a loan with a lower rate to avoid the problem in the future.
Do Payday Loans Hurt Your Credit?
A high-interest loan is typically not reported to credit agencies. If you take out a loan and repay it, you should be fine. However, if you miss payments or default, the lender may send your loan to collections.
If that happens, it’s likely it will negatively impact your credit.
What Apps Let You Borrow Money Until Payday?
Apps that provide early access to earned wages have grown in popularity. A paycheck advance app connects to your bank account and lets you transfer upwards of $500 to your account several days before your payday.
Earnin, Dave, and MoneyLion are companies in the space that let you receive earned funds before you’re paid. To avoid fees, do your due diligence before signing up for a service like this.
These platforms seem great, but there are some risks. Read our guide on cash advance apps to learn if they might be a solution for you.
What is the Best Way to Avoid Payday Loans in the Future?
The best way to avoid these loans is to create a budget, reduce spending, and increase your income. A side hustle can increase your earnings, while a budget will help you reduce expenses as you identify needless spending.
Read our guide on the top free personal budget software programs help you get on track.
You may think high-interest loans are the only way to take care of your short-term financial needs, but they’re not. They are predatory and lead to long-term financial pain. You should avoid taking one out if at all possible.
The smart alternatives to payday loans provide the money you need without causing undue burden, helping you avoid the associated financial stress.
Have you ever taken out an unsecured loan or considered it? How much do you have in your emergency fund?
*Earning more on certain types of orders (ex. alcohol): Earn more per order as compared to restaurant orders. Actual earnings may differ and depend on factors like number of deliveries you accept and complete, time of day, location, and any costs. Hourly pay is calculated using average Dasher payouts while on a delivery (from the time you accept an order until the time you drop it off) over a 90 day period and includes compensation from tips, peak pay, and other incentives.
*Get paid instantly (DasherDirect): Subject to approval
*Cash out daily (Fast Pay): Fees apply
*Start Dashing today: Subject to background check and availability
*Dash anytime: Subject to availability
*Personal Loan Disclaimer: Fixed rates from 8.99% APR to 25.81% APR reflect the 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount. SoFi rate ranges are current as of 05/19/23 and are subject to change without notice. Not all applicants qualify for the lowest rate. See Personal Loan eligibility details. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors. See APR examples and terms.
Loan amounts range from $5,000– $100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0%-6%, which will be deducted from any loan proceeds you receive.
Autopay: The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi.
Direct Deposit Discount: To be eligible to potentially receive an additional (0.25%) interest rate reduction for setting up direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A. or eligible cash management account offered by SoFi Securities, LLC (“Direct Deposit Account”), you must have an open Direct Deposit Account within 30 days of the funding of your Loan. Once eligible, you will receive this discount during periods in which you have enabled payroll direct deposits of at least $1,000/month to a Direct Deposit Account in accordance with SoFi’s reasonable procedures and requirements to be determined at SoFi’s sole discretion. This discount will be lost during periods in which SoFi determines you have turned off direct deposits to your Direct Deposit Account. You are not required to enroll in direct deposits to receive a Loan.
The following payment example depicts the APR, monthly payment and total payments made during the life of a personal loan with a single disbursement. All loan rates below are shown with the autopay discount (0.25%) and direct deposit discount (0.25%). The monthly payment for a $30,000 loan with a 60-month term and a fixed annual percentage rate (APR) between 12.95% – 25.03% would be $681.82 – $881.07 in monthly payments, with total payments between $40,909.47 – $52,864.05. Your actual interest rate may be different than the loan interest rates in these examples and will be based on term of loan, your financial history, and other factors, including your cosigner’s (if any) financial history. Lowest rates reserved for the most creditworthy borrowers. See SoFi.com/eligibility for details.
Choncé is a Certified Financial Education Instructor (CFEI), personal finance freelance writer, and blogger who focuses on helping others manage their money better in order to live a life with more possibilities and fewer limitations. Her work has been featured on Business Insider, LendingTree, Credit Sesame, and Barclaycard.