There are a lot of misconceptions about payday loans. For example, many people think that they’re only for those who have bad credit or no other options. In reality, there are plenty of ways to get emergency cash without taking out a payday loan if you know where to look and what steps to take beforehand.
What are payday loans?
A payday loan, also known as a payday advance, is a small sum of money that is given to you in exchange for your next paycheck.
Payday loans can have high interest rates and often come with signs up fees that range from $15 to the borrower’s state’s maximum.
They can be a temporary fix when you find yourself living paycheck-to-paycheck and need something quickly.
But, if you’re unwilling to pay it back with your next paycheck (plus the fee) you’ll end up paying more than double on what you borrowed and likely get a bad credit report.
Is it possible to get an emergency cash loan without taking out a payday loan?
You can get emergency cash from a couple of different sources without taking out a payday loan, such as your credit union, a traditional bank, or the USAA.
The one you choose will depend on what they offer and if it’s convenient for you. These are different options that are worth investigating to see which one will work best for you. let’s look at these options so you’ll know what’s out there and how to use them.
Alternatives to payday loans:
Cash credit unions
Credit unions have become increasingly popular over the past several years due to a number of reasons, including the fact that they charge less interest rates than banks.
You can get a loan from your credit union and they may even offer emergency loans if your situation is dire enough. The downside to this option is that not all credit unions offer these services.
In fact, most of them don’t! So you’ll need to check with your state’s credit union association for more information on what type of loan options they may have to offer.
Loans from traditional banks
There are banks that offer loans for those who need emergency cash. These can be a good option, depending on your financial history and the policies of your local bank.
You’ll have to fill out an application and most likely take out a loan over the course of several years, but it will help you get the money you need right away without having to worry about paying a high interest rate on your loan.
You can also turn to USAA for emergency cash in a pinch, whether you’re an active military service member or they’ve extended services to veterans and those with military connections. This type of loan is available regardless of where you live, so you may be able to use it if you reside in an area that doesn’t have a large number of banks or credit unions.
Loans from friends and family members
Friends and family members can be a good option for when you need money and you don’t want to take out a payday loan. It might not be the most convenient option, but it can get the job done as long as your friends or family are able to help you out.
You may feel more pressure to pay them back on time since they’re helping you out of a sticky situation, so this is something to keep in mind.
You can ask for a loan from friends or family members by popping into their office for a quick chat or sending an email. They’ll have to know that you’re in dire straits before providing you with any type of financial assistance, so make sure this is clear before reaching out to them.
Borrowing from your 401k
You can get a loan from your 401K if you have one! It’s typically not wise to take a loan from this account, but if you’re in dire need of some cash and don’t really want to take out another type of loan because it will be more expensive.
You might be charged for borrowing from your 401K so make sure you know the consequences before taking out the loan. One of the downsides is that we are usually taxed on these types of loans.
Cashing in on investments
It is not a good idea to cash in on investments as they are usually taxed. You should consider the consequences before taking out another type of loan and make sure you know what these might be.
You can suffer from a financial setback if you borrow money and later on have to sell a portion of your investments in order to pay that loan off.
It is possible to get an emergency cash loan without taking out a payday loan. There are some options you can explore such as borrowing from your 401K, asking for a loan from friends and family members, or getting a traditional bank loan.
It may be more difficult than going with the first option of payday loans but it will save you money in the long run! Let’s review these three options so that you’ll know what to do when faced with this situation again.
Which one of these alternatives have you used before?