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Alternatives to Payday Loans

[May 14, 2010.]

 

Payday loan shops can lure you in if you are desperate for cash and can't qualify for credit cards or bank loans. The fact that there are no credit checks or credit score requirements means that practically anybody who earns a paycheck can get a fast loan.

Of course borrowing money this way comes with strings -- most notably high interest rates that can climb into the triple digits. Before you give in to the lure of a fast loan from a cash advance shop, consider some alternatives for getting the money you need.

Boost Your Income

Start by asking for a raise or overtime at your current job. If that isn't an option, find a second job. It doesn't have to be in your current field. Moonlight at the grocery store, deliver pizzas, cut lawns, or wait tables if you need to earn more money. Avoid get-rich-quick schemes and shady business opportunities.

Get a Credit Union Loan

See if you can get a small loan from a credit union. If your employer, school, community, or other organization has a credit union you are eligible to join, take advantage of the opportunity. Credit unions generally charge less than banks to borrow money. However, carefully investigate any credit union you are considering so you don't get surprised by excessive fees or other problems after signing up.

Appeal to Loved Ones

Ask a friend or family member to give you a personal loan. Just make sure you draw up an official document that outlines the terms, interest rate, and repayment period for the loan. Warning: Personal loans between family members or friends can ruin a relationship if both parties aren't clear on what is expected or don't hold up their end of the bargain.

Sell Some Stuff

If you are like many Americans, you probably have stuff sitting in the basement, attic, closet, or even in a storage center, that can be sold to raise money. You should never apply for a personal loan from a payday lender without trying to sell items you no longer use. Don't assume no one would buy your stuff. Remember, one man's trash is another man's treasure.

Change Unhealthy Habits

Finally, stop spending money on expensive vices. It's possible that there is something in your life that you could give up and keep more money in your pocket (and even improve your health). Do you smoke, buy lottery tickets, eat fast food, or hang out at the local bar with your buddies everyday? Maybe you're throwing too much money in the vending machines at work. Whatever your habit is, kicking it can only help improve your finances.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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