December 12, 2022
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Money Hacks

The Best Payday Loan Alternatives

Before checking sites like Advance America, we’ve rounded up a few ways you could get help if you’re stuck for cash 💙

Welcome to our Ted Talk on everyone’s favorite subject… ✨ payday loans ✨

Also known as “short term, high interest loans that can totally suck.”

We’re gonna take a wild guess and assume you’re here because the thought of taking out a payday loan has crossed your mind 👀

Absolutely no judgment here 💖

Sure, payday loans are easy to set up and literally require minimal checks but you could find yourself up to your eyeballs in debt within just a few months. It’s not cute.

And there are many other options you could try first.

So let’s kick things off with a lil lesson in payday loans and why they can be so tricky.

Via Giphy

What is a payday loan?

Payday loans are short term loans which are infamous for their ridiculously high interest rates. The basic idea is that they’re loans which you’re meant to repay in full the next time you’re paid.

Unfortunately, if you’re a gig worker or you have bad credit, you’re more likely to qualify for payday loans than other financial products like credit cards and personal loans.

And because the majority of people who apply fit into the above categories, payday lenders make up for the “increased credit risk” by charging over 600% interest 👹

GFY.

How do payday loans work?

If you’ve been approved for a payday loan, you’ll usually get the funds quite quickly, sometimes within a few hours.

Typically, you’ll be asked to pay the loan back in full plus any fees 14 days after the date you received the funds, or when your next paycheck hits your account.

The interest depends on the amount you’ve borrowed but the Consumer Finance Protection Bureau (CFPB) says the APR is usually 400% 🙃

Some payday loans can even charge over 600% in certain states.

How very kind of them.

It’s reported that only 14% of borrowers can actually pay back what they owe, and 80% of those who manage to pay the loans back, take out another loan within two weeks.

This kinda shows payday loans just cause debt on top of debt.

It’s a vicious circle ⚠️

And as these loans come with hefty fees and short repayment periods, the risk of damage to your credit score is high.

If you’re struggling financially due to payday loans, you may find our how to get out of a payday loan nightmare blog helpful.

So to help you avoid those fees, here’s a run down of payday loan alternatives.

Reach out to your lenders

Firstly, if the only reason you’re considering borrowing money is because you’re unable to pay your bills for a short while, reach out to your lenders to see if they are able to pause payments or give you an extension until you have the funds. You may also be able to request a pause or reduction on interest rates.

When you contact them, you’ll probably be asked to answer questions such as:

  • Your financial and employment situation
  • How much you can afford to pay
  • When you think you’ll be able to restart regular payments
  • Your income, expenses and assets

🔈PSA: Make sure you get any credit agreement in writing.

0% APR credit cards

If you have a decent credit rating, you might be approved for a 0% APR (annual percentage rate) credit card. You’ll have an interest-free period which is usually around six to 21 months.

Once the 0% interest period comes to an end, you’ll then be charged the full standard rate so it’s important to pay the balance off whilst it’s interest-free to avoid fees.

Terms and conditions differ from lender to lender so always read the small print and double-check the charges before you make a decision 🔍

Here’s the 10 best 0% APR and low interest credit cards of December 2022.

See if you can get a paycheck advance

Your employer may be able to offer you an advance on your paycheck which is usually then deducted from the following months pay.

And although you won’t be paying any of the dumb interest payday lenders charge, try to avoid asking for this frequently as it could lead to poor financial habits.

⚠️ Only ever borrow what you need

Cash advance apps

If you’re looking for a quick spot, a cash advance could be an option.

What is a cash advance?

There are tons of apps out there that can give cash advances. They’ll let you borrow a small amount from them (which is usually between $20-$500) until you get your next paycheck 💸

But compare the apps first to see which is the cheapest to borrow from as subscription fees differ and some lenders may have interest charges and late fees.

It can usually take up to three business days before a cash advance hits your account, however, if you’re looking for an instant cash advance, you’ll need to pay an express fee.

Are cash advance apps better than payday loans?

Umm, yes.

Why?

Because you won’t pay the ridiculous interest payday loans charge.

The Consumer Financial Protection Bureau says a typical two-week payday loan with a $15 per $100 fee equates to almost 400% APR.

Daylight robbery.

So if you’re looking for a payday loan alternative, a cash advance app could be a much better option.

Earnin cash advance

💵 Maximum amount: $500
🏦 Fees: voluntary tipping and no late fees
🚀 Speed: one to two business days
✅Repayment: typically your next payday
🔎 Credit check: no
📈 Interest: no

Dave cash advance

💵 Maximum amount: $500
🏦 Fees: $1 monthly membership and no late fees
🚀 Speed: one to three business days
✅Repayment: your next payday
🔎 Credit check: no
📈 Interest: no

Brigit cash advance

💵 Maximum amount: $250 ‍
🏦 Fees: $9.99 monthly subscription and no late fees ‍
🚀 Speed: two to three business days or pay a small fee for express delivery  
✅ Repayment: typically your next payday but Brigit says if you need an extension, you won’t be charged ‍
🔎 Credit check: no
📈 Interest: no

Chime cash advance

💵 Maximum amount: $200  
🏦 Fees: option to tip and no late fees
✅ Repayment: your next payday  
🔎 Credit check: no  
📈 Interest: no

Cleo cash advance

The ultimate gig worker cash advance app

💵 Maximum amount: $100*
🏦 Fees: $5.99 monthly subscription and no late fees
🚀 Speed: three to four working days or today if you pay an express fee of $3.99
✅ Repayment: it’s up to you when you want to repay
🔎 Credit check: no
📈 Interest: hell no

And if you’re looking for something that could help you work on your credit score, here’s how you could build your credit with Cleo.

Everyone deserves a chance at working on their credit, and that’s why Cleo Builder was created. It’s completely focused on helping you build your credit history and improving your score.

*Eligibility requirements apply.

Enjoy this post? Give it a share or send it along to a friend. You never know, it could make a big difference. And of course, if you want to try the best money app in the world for free, just hit this link right here.

Big love. Cleo 💙

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