Predatory lending is a huge problem because it can get individuals and families stuck in a cycle of borrowing at very high interest rates. Payday loans are the worst type of predatory loans. They usually charge excessively high interest, start accruing interest right away, and often cause people to borrow again and again to keep repaying these short-term loans.
But they can seem really tempting if you’re in a tight spot and need some cash quickly. Luckily, there are other alternatives available for private citizens and military members alike. Here are 7 payday loan alternatives to check out:
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Alternatives Available to Everyone
Whether you’re in the military or not, you have alternatives to payday loans. Here are a few options to consider:
1. Get a personal loan
Personal loans can take a little longer to come by, but with today’s technology, you can have money within a couple of business days. Check out personal loan aggregator sites like Lending Tree to compare loans you might qualify for.
Some personal loans will have a pretty high interest rate, especially if you don’t have a great credit score. However, they are nearly always going to have a better interest rate and better overall terms than a payday loan. And you can typically get money into your personal bank account within two to three business days.
2. Look at introductory-APR credit cards
If you have decent credit and find yourself in a financial pinch, consider credit cards with a low introductory APR. These cards often come with a 0% introductory APR for the first several months of card ownership. You can use this card to charge your emergency expenses and then pay them back without having to pay interest.
Some of these cards are available to those with average-to-high credit. So it’s worth looking into even if you don’t have excellent credit.
Again, though, getting access to this money may take a few days to a couple of weeks. So if you need cash immediately, consider one of the other options on the list. Then if you qualify for a 0% introductory APR, you might transfer the outstanding debt onto that so you can pay it off without paying as much interest.
3. Get a credit card cash advance
If you already have a credit card with available credit, consider getting a cash advance on your card. A cash advance will have a higher interest rate–often much higher–than your standard APR. And it usually will charge a $5 to $10 fee for taking out cash. However, it does give you quick access to cash with an interest rate that’s still likely lower than what you’ll get with a payday loan.
And, again, if you then qualify for a card with a 0% introductory APR, you can consider transferring your balance to it to ultimately save big on interest.
4. Look at payday alternative loans
As payday loans have become more and more of a problem, payday alternative loans (PALs) have sprung up. These loans are often available at credit unions, and they let you borrow a small amount of money for a short amount of time at a much lower interest rate than payday loans. If you’re already a member of a credit union, find out if you can access a program like this.
Some companies also specialize in payday alternative loans for military members and families, specifically. These companies are often backed by nonprofits seeking to combat the payday loan crisis in low-income areas or around military bases.
5. Get an advance on your paycheck
Finally, you can check with your employer to see if you can get a payroll advance. You can often pay back salary advances over time, and you won’t likely have to pay much interest, if any at all. If you’re eligible, a salary advance can be the ideal alternative to a payday loan.
The above options are available to everyone, military or not. But if you’re in the military, you may have access to a few options that are even better.
6. Look at military-specific personal loans and SCRA benefits
Some military-specific entities offer personal loans that are often available at a lower rate. For instance, USAA offers personal loans specifically for active-duty military members. The loans have flexible repayment terms and generally low APRs. And they don’t have any origination fees, which means that the money you borrow is all you have to repay. Military branch credit unions will typically offer similar deals.
Other mainstream lenders also offer Servicemembers Civil Relief Act (SCRA) benefits, which can cap interest rates on personal loans at as low as 6%. That’s a lot lower than you’ll find with payday loans! Many mainstream lenders, including OneMain Financial, Capital One, and Discover, offer SCRA benefits to eligible servicemembers.
However, the typical application process for these loans may not include SCRA information. If not, you should call the lender directly to find out about getting a lower-interest personal loan as an active-duty military member. The savings will be well worth the additional phone call it takes to get these benefits.
Again, though, remember that the personal loan application process can take longer than getting a same-day payday loan. One option here is to charge your emergency spending on a credit card and then pay it back with the personal loan. Or if you absolutely have to get a payday loan for an emergency, apply for a personal loan right away to pay it back. Then you can quickly break the cycle of high-interest, short-term borrowing.
7. Check out military aid groups
Finally, each branch of the military has its own relief or aid group, and many of these entities offer quick alternatives to payday loans. Here’s what you can expect from each group:
- Army Emergency Relief – Service members and immediate family members can apply for interest-free loans from Army Emergency Relief for emergency travel, healthcare expenses, essential furniture, minor home repairs, appliance maintenance, and other pressing expenses. There’s no maximum amount for these loans, and you may get assistance on the same day you apply.
- Navy-Marine Corps Relief Society – This society offers a variety of relief and assistance options for navy and marine corps members. But the quickest option is the Quick Assist Loan, which is an interest-free loan for up to $500 that must be repaid within 10 months.
- Air Force Aid Society – AFAS has a variety of emergency assistance options. Standard Assistance can include a loan or grant in tandem with financial counseling and budgeting help for emergency situations. Falcon Loans are expedited, no-interest loans of up to $1,000.
- Coast Guard Mutual Assistance – Coast Guard members can access a variety of financial assistance, including financial counseling and adoption assistance. But if you’re in an emergency, the Quick Loan Program is probably the best option. It offers an interest-free loan of up to $1,000.
Alternative options for payday loans are available for everyone. And military members–active duty, retired, and their families–have access to even more and better options than most people. If you’re in need of quick cash, steer clear of the payday loan shop, and try out these alternatives instead.