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Payday loans can be a great source of financing to cover your urgent costs, especially if you have no savings, no friends, or less-than-perfect credit score to apply for longer-term options.

However, although they can be very easy to qualify and receive, a payday loan can quickly turn into a headache for many people. There is no surprise that more than four out of five payday loans are re-borrowed within a month on their due date or shortly thereafter.

Thus, before you take one out, it is important to explore other options for managing your finances and paying off debt. Below, we will walk you through 6 alternative ways to a payday loan.

1. Payday Alternative Loan

Many credit unions offer Payday Alternative Loans (PALs) to their existing members. With the help of a PAL, you can borrow a small-dollar amount – typically up to $1,000 – with a maximum APR of 26% and repayment timeline up to one year. In certain credit unions, there may be an origination fee of up to $10 or $20 for an application. But in general, PAL is usually lower in cost and longer in term than a payday loan.

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As many as six PALs may be given to the same customer during twelve months, as long as no PAL rolls over or overlaps. Large credit unions may be able to approve and fund a loan within a few working days. For local credit unions, however, the process could take longer.

2. Bad Credit Loan

Instead of taking out a payday loan, you may be able to request a bad credit loan. Some lending providers offer this type of financing for borrowers with a FICO score below 690. The amount for bad-credit loans usually ranges from $300 to $10,000.

If you are looking for an unsecured bad-credit loan, be prepared for high interest rates, which are around 500% to 600% APR. That said, you may also borrow against your car, home, or other collateral pledge needed to back up your debt. This means that you can apply for small or large amounts, with bad credit, and the rates can be quite affordable, under 35% APR.

3. Buy Now, Pay Later Services

BNPL providers, like Affirm, Afterpay, Klarna, and PayPal, can also provide an inexpensive way to borrow. They allow customers to make a purchase and receive it immediately but pay for it later on, typically anywhere from 3 to 12 months over a series of installment payments.

These plans may come with interest rates and charges that can be expensive, though some BNPL plans charge neither. For example, the most common pay-in-four model (four equal installments, each due two weeks apart, the first due at checkout) doesn’t usually charge any interest. Therefore, if you are able to pay off your bill within a short period of time, they can offer more flexible financial relief.

Even though this type of financing has been available for years, it gained a lot of popularity during the past two years as more people shifted to online shopping. Nowadays, BNPL is offered at most major merchants, but it is likely to see the services for rent and groceries in the future.

4. 0% Interest Credit Card

If your FICO score is 690 or above, you are able to qualify for a 0% intro APR credit card, which, as the name suggests, charges zero percentage during the card’s intro period – typically 6 to 24 months. With this option, you can owe the money and have a significant period of time to pay it back before the APR kicks in.

Credit card companies will report payments to the three credit bureaus. Therefore, on-time payments can help you build credit, while missed payments will affect your score in a negative way. It is also possible to receive a sign-up promo or access to a rewards program.

5. Small Personal Loan

If you want to repay your loan for a longer period, a small personal loan could make sense for you. They are not secured by collateral and are available for customers across the credit spectrum, unlike some regular personal loans.

You will need to pay interest on a small personal loan, but with longer terms, so the monthly payment may fit more comfortably in your budget. They offer fixed interest rates which are generally much lower than a payday loan.

6. Quick Cash Options

If you’re in a difficult financial situation and looking for a more immediate funding source, there are some fast options to find some relief:

  • Ask your employer for support: If you are employed, it may be worth speaking to your employer and asking them for a cash advance on your paycheck. This may cover your financial needs, without incurring any fees or charges.
  • Cash out your credit rewards: If you are a credit card member with a rewards program, you might be able to exchange your perks for a good amount of change.
  • Seek help from a credit counselor: Many nonprofit organizations offer financial assistance for those facing hardships. A certified credit counselor can typically help you pay off your debt faster.

All these options are valid and could be of short-term aid to those in need. However, if you are consistently finding yourself desperate for cash, you need to carefully look at your budget and adjust it if you can, thus making loans less necessary.

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