Payday Loan Solutions

[May 14, 2010.]

 

Quick payday loans may seem like the easiest fix for an emergency that requires instant cash, but some consumers find themselves turning to these loans too often. Payday loans, as long as they are paid in full with your next paycheck, can be an alternative worth trying.

The Federal Trade Commission recommends using an alternative to instant payday loans whenever possible, but suggests that if you do use payday advance loans, that you borrow only as much as you can afford to repay the next time you are paid and still have funds available for your regular bills.

Payday Loan Tips

• Shop around for cheap payday loans. Make sure you compare the cost of each credit offer. Look for payday loans with the lowest annual percentage rate (APR) in case you must rollover the loan into another payday loan. Compare the fees on these loans.
• Borrow the lowest amount of money possible to meet your immediate needs so you won't have trouble paying back the payday loan with your next paycheck.
• Ask your employer for an advance on your paycheck instead of taking out a payday loan, because an advance is usually free. But be prepared for your next paycheck to be smaller.

Payday Loan Alternatives

• Check with your bank or credit union to see if you can qualify for a small, short-term loan, which could be cheaper to finance than a payday loan. Be sure to compare the rates and fees. A cash advance on a credit card may also be available, but again, this could be more costly than a short term payday loan.
• Contact your creditors to tell them you are having trouble paying your bills. Many will work with customers to extend payments. Be sure to ask if they charge you higher interest rates or other fees. If the costs are too high, cheap payday loans could be a better option.
• Contact a consumer credit counseling service to help you develop a debt repayment plan and a budget. Non-profit groups can help you for little or no cost. Your credit union, employer, or a local housing office may also offer these services.
• Make a budget. Write down everything you spend and find ways to save even small amounts of money every week or every two weeks in order to build an emergency savings fund.
• Find out about overdraft protection available from your bank. The bank may charge you for this protection, so be sure to ask how much it costs.

Payday advance loans can sometimes be the lowest cost option in an emergency, but be sure you look at potential alternatives, borrow the smallest possible amount, and look for the best payday loans with the best terms.

 

About Author:

Michele Lerner is a freelance writer with twenty years of experience writing articles and web content for newspapers and magazines on topics related to real estate, personal finance, and business.