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15 Alternatives to Payday Loans

Dealing With Financial Emergencies Without a Payday Loan

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People who take out a payday loan expect it to be a one-time thing. They take out the $250 fully intending to pay it back in two weeks, or less. However, the average payday loan customer is in debt for five months and pays $520 in interest (on top of the original loan amount), according to research from Pew Charitable Trusts.

When an emergency arises, you may need to get your hands on cash in a hurry, but there are far less expensive ways of borrowing.

Sell or pawn things you no longer need

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© Smith Collection / The Image Bank / Getty

You can use eBay or Craiglist to sell off household items you don't need anymore. It's worth the sacrifice to sell things you may not have a strong personal attachment to, like a pool table or grill. Some items can be taken to the pawn shop for a quick sale. Or, have a yard sale to unload multiple items at one time.

Talk to your creditors about extending your due date

When you know you won't be able to make your payment, call your creditor and let them know. Many will allow extend your due date without charging a late fee or reporting you to the credit bureau. Do the same with utility or phone services.

Work some overtime

If your employer allows it, work a few extra hours to get some overtime pay.

Get a side job

If you have a hobby or skill that's in demand, offer your services to people in exchange for money. Erin Huffstetler, Guide to Frugal Living, has an extensive list of hobbies that earn money.

Ask your employer for an advance

In effect, this is the same thing as a payday loan, but without the excessive fees and loan trap. Talk to someone in your human resource department about an advance on your next paycheck. Keep in mind that getting an advance will lower your next paycheck. Some employers even give loans that can be repaid in increments over multiple pay periods, lessening the effect on your take-home pay.

Adjust your tax withholding

Having extra money withheld from your paycheck so you can get a bigger tax refund is a bad idea when you're struggling to make ends meet. The IRS website has a tax withholding calculator you can use to figure out how much tax should be taken out of your paychecks. Be careful to make sure you're getting enough taxes withheld, otherwise you'll end up owing taxes next April.

Tweak Your Income Tax Withholding, About Financial Planning

Cut out some of your bills

Read how to Get Money to Get out of Debt, for some ideas on ways to decrease your monthly expenses. Doing some of those things can give you a quick boost in your income this month.

Look for local emergency hardship programs

You may find some local organizations who will give or loan you money to help you out. Contact your local Department of Human Resources to find out if there are any emergency assistance programs in your area. Local churches and other humanitarian organizations (like the Salvation Army) are also places you can look for help.

Borrow from a friend or family member

Borrowing from friends and relatives can be tricky. Money and friends/family often don't mix and you can end up with a broken relationship, which can be even worse than owing a payday loan company. Keep that in mind as you consider going to a loved one for money. Be as serious as paying back a friend or family member as you would the bank or business lender.

Take out a small loan from your bank or credit union

If you have a steady income and pretty good credit, you may qualify for a small personal loan from your bank. These definitely have lower interest rates and more lenient repayment terms than a payday loan or check advance.

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