6 Healthy Alternatives to Payday Loans

The word “broke” in this present time is a relative term. Almost everyone’s feeling the financial squeeze and needing a few extra pennies.

Don’t make that call to borrow a huge sum of money yet. There is a wonderful alternative to payday loans. 

Knowing where to go and who to ask when you need funds keeps you from going into debt. You also avoid the burden of digging yourself out of a pool of interest. Some payday loans are so interest-laden, you pay hundreds before putting a dent into principal. 

Also, when you use alternative funding, you have a lesser risk of ruining your credit. If you fail to pay a payday loan, the lender places the debt on your credit report.

Payday loans can ruin your finances. Read on to discover the best alternative to payday loans to remain financially healthy here.

1. A Great Alternative to Payday Loans? Form a Lending Circle

There are some beneficial things to consider when looking for a financial alternative. You don’t have to go far from familiar faces to get the help you need. 

Form a lending circle. 

A lending circle not only helps you but helps others who need a financial leg up as well. Call together a group of individuals you trust. Every person in the circle agrees to put a specified amount in the pot every month. 

After you agree on an amount, each person gets assigned a number. By starting at number one, each person gets a chance to empty the pot and use money at their will.

This helps you cover whatever debts you have or soothe your financial struggle when your number pops up.  

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Make sure everyone has a steady stream of income before forming the circle. 

Payday Loans

2. Rely on a Friend or Family Member

Nobody knows your struggle like your close family and friends. Consider a bestie or mom and dad for a short-term, no-interest loan.

Set-up a payback plan on a schedule and use CashApp, PayPal, or Venmo. These apps deliver instant payments without having to wait for days. Make your payments on time, so if you ever need family or friends again, they’ll be there. 

3. Negotiate With Creditors

Most creditors don’t want to go through the drama of repossession or credit reporting. They’d rather work out a settlement to make sure they get paid.

Contact your creditors and negotiate lower payments or a deferment of payments. Lower payments give you the financial room to take care of other finances. Deferred payments help you get out of the hole.

4. Downsize 

If supporting your current lifestyle is too much financially, downsize. Opting for a smaller living space equates to a smaller financial overhead. 

You’ll benefit from lower electric and utility payments. 

5. Take Advantage of the Pawn Shop

Often people have a house full of things like electronics that they no longer use. These things have value.

Consider pawning things like electronics, old TVs, jewelry, and other items you don’t use. It’ll surprise you how much money you could get back for those things. 

6. Local Assistance

Different local organizations like churches and community leagues offer financial assistance. Some pay utility bills on your behalf.

This helps you take that intended money and use it towards a larger bill. Others pay your rent or give you a small stipend towards other pending debts. 

READ  Online Lending: Benefits of a Payday Loan

Take Advantage of the Alternatives 

Choosing an alternative to payday loans saves you a lot of financial headaches in the future. Consider these options before taking the plunge into long-term debt. 

Ever consider looking into investing? Take a look at our money investment guide for financial tips in personal finance. 

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