The Best Alternatives to Payday Loans for College Students Who Need Cash
In an ideal world, all financial problems would be solved with a simple solution: make more money . Obviously, it’s never quite that simple in the real world.
While increasing your income should be part of any long-term strategy when you’re struggling to make ends meet, sometimes you need money right now. In this case, it’s tempting to apply for a payday loan just to keep yourself afloat.
Here’s why you shouldn’t do worldpaydayloans.com/payday-loans-or/ that – and where to look instead. Funding U does not necessarily recommend any specific payday alternatives, but we’ve put together enough information for you to make the decision on your own.
What are payday loans?
Payday loans are short-term loans, usually around $350, with extremely high interest rates, ranging from 129% APR to 591% APR depending on the state. The average borrower will pay $520 in fees just to borrow $375.
Payday loans are popular because they don’t require a credit check and will accept anyone who has a regular source of income. Unfortunately, most people who take out payday loans can’t repay them immediately and have to renew the loan, triggering another round of fees. Approximately 22% of borrowers renew their payday loans six times or more.
Payday alternative loans
Some credit unions offer payday alternative loans (PAL). These are like a hybrid of personal loans and traditional payday loans.
PALs range between $200 to $1,000 and have a term length between one and six months. Credit unions sometimes charge a $20 application fee. To be eligible for a PAL, you usually must have been a member of the credit union for at least a month.
The maximum interest rate on a PAL is 28%, much lower than a payday loan and similar to a personal loan. Borrowers are limited to taking out three PALs in a six-month period. Read more