Payday loans are short-term loans that allow you to take out a loan that will be paid the next time you receive your salary. They are very convenient because they are fast and easy to get, and they don’t have stringent credit checks. As a result, they are often taken out by people in a financial emergency or don’t have enough money for living expenses.
However, payday loans don’t have the best reputation out there. They are often predatory due to the sky-high fees, quickly snowballing you into colossal debt. In addition, they often have an astronomical APR, not to mention the late payment fees you have to pay once you fail to pay the loan on time.
In short, payday loans aren’t necessarily the best option out there when you’re in a financial pinch. So what other options in the market can you go for when you need financial help? Here are some financial alternatives you might want to hear about.
Bad Credit Loans
Bad credit loans are technically personal loans but with a few key differences. They are often offered to people who can’t get traditional personal loans due to poor credit scores and bad credit reports. They are used for the same things as traditional personal loans, like debt consolidation, medical bills, etc.
However, bad credit loans typically have higher interest rates and a shorter repayment term. Still, you can get them from the same places, such as traditional banks, lenders, credit unions, or online lenders like CreditNinja.
Credit Union Loans
You can also get a personal loan from credit unions if you’re a member of one. They have multiple benefits over personal loans you from traditional banks and lenders, like lower interest rates, fees, and better repayment terms.
Credit unions offer the same financial products and services that your traditional banks and lenders offer, like access to ATMs, direct deposit, credit cards, overdraft protection, etc. So if you’re hesitating whether to get a loan from a traditional bank or a credit union, you’re better off getting one from a credit union.
Banks are for-profit institutions, which means they are businesses looking to make a profit by offering you bank products and services. On the other hand, credit unions are financial institutions. In other words, they are made by the members for the members.
Credit unions can use their non-profit status to pass off their savings to their members in different forms like lower interest rates on their loans, higher interest rates on their savings accounts, loan discounts, better repayments, etc.
And even if your credit score is not so great, you can still be eligible to get a loan with lower interest rates and better repayment terms. Sounds good, right? But before you can enjoy those benefits, you need to be a member first. Credit unions are often made for people in the same HOA, churchgoers, PTA members, etc.
Credit unions are also open for everyone as long as you meet their requirements. However, simply being a member isn’t enough to get those benefits. It’d help if you were a member of the credit union for some time first and have made significant contributions to the institution.
Home Equity Line of Credit
A home equity line of credit or HELOC is a line of credit secured by equity that offers you revolving credit for varying expenses. In addition, a HELOC often has a typically low interest rate compared to traditional loans you can get from other financial institutions, and the interest is tax-deductible. So how does it work?
With a HELOC, you’re borrowing from the equity in your house, and with this, your house becomes collateral for the loan. It works just like other lines of credit, as the overall amount of available credit is replenished if you pay off your outstanding balance. This means that you can borrow again if you need to.
The only thing you need to qualify for a HELOC is to have some equity built up in your house and a slightly better credit score.
All of the loans mentioned above can work as a CreditNinja payday loans alternative. But payday loans are mostly faster and much easier to approve because they don’t necessarily have a strict credit check.
Payday loans are quick and easy to get, but they aren’t necessarily the best option because of their sky-high fees and penalties. If you’re in a financial pinch but are not a fan of payday loans, you should try at least one of the alternatives. Remember that they are highly situational, but we’re sure that at least one of them is the best fit for your financial circumstances.