Although we have all bid goodbye to the full impact of the Great Recession, there are many consumers who still face fiscal emergencies and desperately look for immediate cash. For decades now, payday loans have been a popular option, especially when it comes to getting access to fast cash within a day or two. Presently there are more than 25,000 storefront payday loan stores throughout the nation as per Consumer Federation of America in Washington D.C. It has also been estimated that the payday loan industry makes around $50 billion in loans and collects up to 6% in the form of finance charges from the borrowers every year.
However, despite such staggering statistics, it is not always necessary to resort to this scary lending option. Luckily, there are several alternatives to payday loans. Check out these alternatives to payday loan lending.
- Credit union loans: The leaders of the credit unions usually work and live with the same communities and hence they became the first monetary executives to check out the need for payday loan alternatives. The members of the credit union can borrow up to an amount of $500 per month and the amount needs to be repaid with funds from the next paycheck. So, if you’re a member of a credit union, you can skip taking out payday loans and instead take resort to loans from the credit union members.
- Credit counselors: If you’re in need of immediate cash, this option might not help you but if you want long run relief, this is certainly going to help you. It is when you speak with a counselor that you can get your finances in order and hence chances will be high that you will be paying off your debt on time. Credit counselors are affiliated with the NFCC or the National Foundation for Credit Counseling and they provide you free money management help.
- Small bank loans: Now there are some major banks that are offering low-cost alternative loans to payday loans. In 2008, the FDIC launched the Small Dollar Loan Pilot Program through which you could get small amounts of loans that would be enough to deal with your short term financial needs. Around 40 banks throughout the US offered loan amounts of about $1000 with the interest rate capped at 26% and repayment periods that extended till the next payday. These are another form of short term loans that you could take out to avoid payday loans.
No one wants to find themselves in need of an emergency loan. However, if you find yourself in this situation, examine your options before reaching for a payday loan. Thanks to alternatives like these, you don’t need to fall into the payday loan debt trap.