What are the alternatives to a payday cash advance?
If your budget is tight, making ends meet can be an uphill battle. If there’s anything that can make this struggle even more difficult, it’s an unexpected expense.
Maybe your cat swallows a rubber band and needs emergency veterinary care. Or maybe your car refuses to go over 40 MPH, so an unexpected trip to the mechanic’s shop is in store.
A sick pet or a broken down car requires immediate repair. Like many emergencies, these are non-negotiable, urgent expenses that you need to take care of now, even if you don’t have a cash cushion or good credit.
If you run out of money before payday, a payday cash advance seems like the perfect solution. But is it?
What are payday cash advances?
The financial experts of MoneyKey describe payday cash advances as small, short-term loans. As the name suggests, these loans advance you funds until your next payday.
Advances come from a variety of banks and online direct lenders, but they all have these three things in common:
- Funds: Most advances are around $500 or less, making them ideal for minor repairs or medical expenses, but not for major purchases or complicated renovations.
- Terms: To be remitted immediately by your next payday, most cash advances have a term of two weeks.
- Cost: Payday cash advances are designed to help people with bad credit, so they tend to have higher rates and fees. The typical payday loan costs $15-20 for every $100 you borrow, which translates to a triple-digit APR.
This high cost may be justifiable in an emergency, but the short turnaround time of payday advance exacerbates how unaffordable they can be on a tight budget.
Fortunately, there are other options, even if you have bad credit.
Borrow from a friend
This can be an option if you have a good relationship with a friend, but it requires knowing someone who is more in control of their finances.
If a loved one is willing to help you out in an emergency, be sure to treat it like a legitimate personal loan, setting clear expectations for when you should repay what they lent.
Take out an installment loan for bad credit
Money can ruin even the best relationships, so it makes sense that you wouldn’t want to ask your friends that. Fortunately, there are online bad credit installment loans that are available for emergencies. Although they may have similar high interest rates due to your low score, they have a longer term to offset their costs.
As an online monthly installment loan, you can have weeks, months, or even years to pay off what you owe. This will break your loan down into multiple payments, so you won’t have to put the money together in one lump sum like a payday cash advance.
Use your credit card or line of credit
This option only works if you still have space on your card. You can apply for a cash advance through this account, usually at a similar interest rate to your normal fee. However, be sure to read the fine print. Most credit card companies will charge an additional fee for taking an advance this way.
If you don’t have available credit on this account, you can search for lines of credit online as an alternative.
There are alternatives to payday cash advances, so take the time to research how they differ before borrowing a single penny. Your time comparing rates and terms can help you find a better solution to your financial problem.