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Friday, October 4, 2013

Payday Loans - There Are Other Options

Most people who get a payday loan do so because they need money fast. Bills have to be paid to continue utility services and other necessities. Bank overdraft charges can be devastating when they begin to accumulate, and payday loans can seem like a possible solution for short-term financial difficulties. Before resorting to these instant cash loans with exorbitant finance charges, you should consider any other reasonable alternative.

Don't simply assume that you would never be able to get a loan from your bank or credit union. They know you and your banking history, and may be willing to overlook some credit problems and extend you a personal loan anyway. If your employment history is stable, and you have been at your current residence for a while, you will have a better chance of getting a bad credit loan from your banking institution, as well as other lenders.

If your credit is very poor, a lender may offer you a secured loan. You will have to provide a tangible asset that the bank will accept as collateral, that they would be able to sell to cover their losses if you were to default on the loan. Many things can be used as collateral for a secured personal loan. Automobiles, jewelry, stocks and bonds, rare coins, and numerous other assets can often be used for security, depending on the standards of the lender.

Many employers extend loans at very competitive interest rates to their employees. If you are fortunate enough to have an employer who provides this service, you will probably find them willing to extend you a loan, even with sub prime credit. The payments are usually worry free for the employee, as the employer will only loan an amount corresponding to your salary level and any retirement plan you have.

Typically, the loan payments are deducted from your pay by electronic transfer at regular intervals. An employee loan can usually be processed quickly, giving you your money almost as quickly as with a payday loan, with a much more attractive interest rate. You will likely be able to borrow more money as well, because the maximum payday loan amount is usually from $250, up to about $2,000.

Another way to get a loan with bad credit is to get a cash advance on a credit card. If you obtained the card before you began to have credit problems, you will likely have a higher limit on your credit card, and will be able to borrow an amount that corresponds to your amount of available credit. Where a payday loan is usually payable in less than 30 days, a credit card cash advance allows you to absorb the new debt into your existing account, and will give you more time to repay the loan.

Borrowing money from friends or family is a sensitive area for many people. It is, like a payday loan, a last resort in most cases. It really depends on the relationship you have with the person from whom you would be borrowing money. If you choose to get a loan from family or friends, you should agree on a specific repayment plan so there are no misunderstandings or hard feelings.

Regardless of where you borrow money, always learn the details of the loan agreement before you sign anything. What is the interest rate of the loan or the total amount of finance charges you will incur? If you are unable to repay the loan as scheduled, is it possible to roll over the loan, and what kind of fee will you pay for the additional time. If you resort to getting a payday loan, compare several lenders and choose one that offers the amount of money you need at lowest possible cost. Finally, you should continue to improve your credit; the better your credit score, the more options you will have when borrowing money in the future.


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