Installment Loans
Many online lenders now offer unsecured, short-term installment loans to borrowers with bad credit. They are yet another payday loan alternative that, in some cases, can offer cash loans to residents of states that prohibit payday lending.
Compared to payday loans, these installment loans have a longer term and higher number of smaller payments. This means a lower APR for the loan but higher overall cost. Compared to other forms of credit (like personal loans from credit unions), these installment loans are expensive and should only be used for emergency situations.
Let’s take a look at the advantages and disadvantages of installment loans, what they are and why there are so many of them now…
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401(k) Loan
A 401(k) loan is a risky payday loan alternative.
Although 401(k) loans are cheaper than payday loans or credit card cash advances, the benefits are outweighed by substantial drawbacks and risks…
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Family and Friends
Borrowing from family and friends is an interest-free alternative to payday loans.
Loan approval is quick and repayment terms are flexible.
There are, of course, risks involved. Listed below are the basics of borrowing from people you know and simple things borrowers and lenders can do to minimize risks…
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Modest Needs
If your cash need is a one-time, unexpected emergency that requires $350 or less, Modest Needs is an excellent payday loan alternative.
The money provided by Modest Needs is a grant, not a loan. You don’t have to pay it back.
The grants are, of course, subject to limitations…
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Rainy-Day Fund
A rainy-day fund is an excellent payday loan alternative.
If you do not have one now, of course, it cannot help you in any current financial crisis.
Creating a rainy-day fund, however, can help make a future financial emergency less painful…
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Overdraft Credit
An overdraft line of credit is a good alternative to payday loans.
It is a form of overdraft protection.
Unlike bounced check protection, however, overdraft credit is safer and cheaper…
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Bounced Check Protection
Bounced check protection is a dangerous alternative to payday loans.
It is a form of overdraft protection.
Unlike an overdraft line of credit, however, bounced check protection is expensive and carries risks…
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Interest Free Loans for Military Personnel
Many payday lenders target US military personnel:
- service personnel have a steady, guaranteed income
- many service members are young
- many young people do not consider time value or cost of money
There are, however, a wide range of interest free loan options available to American armed service personnel that are excellent alternatives to payday loans…
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Credit Card Cash Advances
Credit card cash advances are a dangerous alternative to payday loans.
While the APR is much lower than that of payday lenders, credit card cash advances are expensive loans that carry risks.
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Credit Unions
Credit unions are an excellent alternative to payday loans.
Many credit unions offer low-cost salary advance loans and free debt management programs as loss-leader incentives to join. These are concrete solutions for short and long-term financial problems.
With credit unions easing affiliation requirements and banks introducing absurd monthly debit charges, there has never been a better time to explore credit unions…
Updated: October 3, 2011.
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