Best alternatives to payday loans to consider in times of crisis
Getting quick access to cash can be difficult at the best of times. It can be even more difficult when times are tough.
If you’re short on cash, a payday loan might seem like the only option, but there’s rarely a good reason to get one.
Even if it’s just a small amount of money to cover an emergency, a payday loan could leave you worse off than before you borrowed.
Here are nine alternatives to consider when you need cash fast.
Local charities and nonprofits
Best for: Free help to cover essential expenses.
Local funding sources, like community centers and nonprofits, are especially helpful if you’re balancing grocery, gas, and other expenses with a new emergency. Some of these organizations may be a resource for donations of food, clothing, or bus tickets for medical appointments or job interviews.
Speed: How quickly you can get help depends on your needs and the organizations in your area. Call them to find out.
Keep in mind: Charities may require proof that you need help, such as recent pay stubs.
Best for: Reduce a large medical bill or make it more manageable to repay.
There are a handful of options you can try before turning to a payday lender for medical expenses.
Payment Plans: Ask your doctor’s office if you can set up a payment plan that splits a large bill into smaller monthly payments.
Advocates of medical bills: Medical bill advocates negotiate bills after an expensive procedure or hospital stay. They can also spot costly mistakes and challenge them.
Medical credit card: Some medical credit cards offered by doctors’ offices have interest-free promotional periods that can help you cover expenses.
Speed: Each option varies in speed, but you may be able to work out a payment plan with the doctor’s office over the phone.
Keep in mind: Each option can be paid. Calculate the amount you will save and compare it to the amount you will pay to make a positive decision.
Best for: Getting money with a credit score below 690 FICO.
Some online lenders tailor their loans to borrowers with bad credit. These lenders can approve applicants debt to income ratios and bad or fair credit scores.
If you are unsure whether you qualify for a loan for bad credit, you can pre-qualify to see what lenders can offer you. It doesn’t hurt your credit score, and pre-qualifying with multiple lenders allows you to compare loan offers.
Speed: Many online lenders offer quick funding and can deposit the money into your bank account within a day or two of approval.
Keep in mind: Online and bank lenders report missed and on-time payments to credit bureaus, which impacts your credit score.
Best for: Members in good standing of a credit union.
If you are already a member of a credit union or eligible to become one, you already have an option available to you.
credit unions consider your credit score on a loan application, but they also look at your relationship with the credit union, your income, and your credit history.
If your caisse offers alternative payday loans, you can borrow a small amount — usually up to $1,000 or $2,000 — with a maximum interest rate of 28% and repayment terms of up to 12 months.
Speed: Larger credit unions may be able to fund and approve a loan within days. If you are a member of a local credit union or need to become one to apply, the process may take longer.
Keep in mind: Credit unions, like most online lenders, report late and on-time payments to credit bureaus, which will affect your credit score.
Best for: Create a temporary or permanent side hustle – or find extra cash where you haven’t looked before.
You can make extra money by selling your clothes, driving for a ride-sharing company, or turning a hobby into an online store.
Some of the options of our guide to making money more time consuming than others, but many of these jobs can be done alone or from home.
Speed: How quickly it will earn you money depends on how you choose to earn money. Selling things online can take anywhere from hours to weeks, while Uber drivers get paid weekly.
Keep in mind: The internet is full of scams to get quick cash. Avoid job postings that require you to pay money or ask for personal or financial information.
Best for: Get money with low or no interest, as long as you are willing to contribute funds to help someone else as well.
A lending circle consists of a group of people who lend money to each other at no or very little cost. This is a long-term commitment because Lending Circles typically raise money for one person each month, but participating can help you raise money for something like a car repair or get you through a hard time.
Some websites work with lending circles to report payments to the three major credit bureaus, which can help improve your credit.
Speed: It depends on when the installment cycle comes to you, but this is a slower funding option.
Keep in mind: You must have a stable source of income in order to regularly contribute to the Lending Circle fund.
Best for: Getting interest-free money, if you’re close enough to someone to ask for it.
Asking someone you trust to help pay a bill or pay you a month’s rent won’t hurt your credit score, but it can hurt your pride.
You and your lender can set terms that define when the loan will be repaid and whether you will repay it in installments or all at once.
Speed: It depends on the terms you and the lender agree to.
Keep in mind: A loan from a family member or friend doesn’t require physical collateral, but you could put a relationship at risk, so make sure both parties are comfortable with the loan before borrowing.
Best for: When you are employed and need emergency money.
If you have a predictable income and need a payday advance, you may consider a cash advance app.
These apps typically confirm your earnings and when you get paid, and offer an advance between $20 and $500 on your next paycheck.
They charge little to no fee, but they may ask for a voluntary tip for service.
Speed: These applications can take from a few hours to a few days to deliver the money. Some charge a small fee for faster service.
Keep in mind: Payday advances are a temporary solution. If you pay regularly to access the money you’ve already earned, you may need to review your budget.
Best for: Get money without a credit check and without having to sell an item.
A pawnbroker is a no credit check option that is one step away from selling your stuff. To get one, you hand something you own to the staff of a pawnshop, and they assess its value and determine whether they’ll give you a loan in exchange for your item.
You and the pawnbroker agree when you will repay the loan – and any other interest or fees – in order to get your item back.
Speed: A pawnbroker will usually tell you on the spot if they will lend you money and how much.
These loans are also not a long-term solution. If you find yourself regularly taking out pawnbrokers, you’ll need to find another solution.