Alternatives to Payday Loans: Break the Debt Cycle

According to a study by PewTrusts, the statistics say that most people who get fast cash loans (also known as payday loans) use the money obtained to pay everyday utilities over the course of months rather than paying some unexpected emergency over the course of weeks. That means that most loaners are actually circling the financial drain, with the danger of bankruptcy breathing down their neck most of the time, and are paying back a high-interest debt about 5 months during every year. In the light of such numbers, the current criticism against aggressive marketers of loans that practice high interest rates is becoming more sensible. To avoid contributing to this picture where a few financial sharks are draining money from an impoverished community who solve their financial troubles on the short run only to deepen them on the long run, perhaps you should take a look at some of the other options. Also, keep in mind that we don’t mean to sound too harsh and that not all fast cash loan lenders are sharks or practice unreasonable interest rates considering their high levels of risk. But all in all, taking a look at the other options is always a good idea, at least for the sake of being informed.

Alternatives to Payday Loans

Actually, there are probably more alternatives to payday loans than you might expect. The payday loans are traditionally associated with the idea of a last resort kind of solution, but that’s not exactly accurate. We’ve previously discussed five options somebody has when confronted with a financial crisis. Today we’ll discuss specifically the alternatives to payday loans. These other options include, but are not limited to, the following: credit union loans that usually have more stringent terms and take longer to get approved but have the advantage of a lower interest, dealing with pawnbrokers, the legal maneuvers of employee access to earned but unpaid wages, paycheck cash advances from employers, auto pawn loans (if you happen to own a car), credit payment plans, the bank overdraft protection program, a few cash advances from credit cards, the local emergency community assistance plans, small consumer loans and the so-called installment loans. All these are available instead of a payday loan, not to mention that you also have the extra but informal option of direct loans from family members or friends. Now, those were more alternatives to payday loans than you were expecting, right? Things don’t look so grim after all.

Break the Payday Loan Debt Cycle

Even if all these options enumerated above as alternatives to payday loans still count as debt, some might be milder and with a lower interest. Check them out, research the options available in your local community and perhaps try one out. They might help you break the fore-mentioned cycle if you you’re unfortunate enough to currently find yourself in it. But, even with all this said on the subject of alternatives to payday loans, we should stress that such loans aren’t always the worst option. Sometimes they tend to be demonized unnecessarily; the truth is that they should be compared not to more traditional and harder to obtain loans which indeed have smaller fees and interest rate, but they should be compared with the costs of not getting one and in consequence being late with bills, other debts and so on. Perhaps if you put it in this perspective and if you really need it, such a fast cash loan isn’t a bad idea after all. But for your piece of mind, you should always look into the alternatives to payday loans at your disposal and decide what’s best.