Are There Alternatives to Payday Cash Advances?

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Although it may seem like a payday cash advance is the only option for people with bad credit, there are other ways to borrow when your score is on the low side.

When it comes to borrowing money, your credit score has an enormous impact on the kinds of financial products you can qualify for. The higher your score is, the more likely one of the big banks will approve you, no problems.

Once your score dips below prime, your options start to dwindle. Some people believe they narrow down to one product exclusively: payday cash advances. 

But are these cash loans the only way a financial institution will provide you with the funds you need? Let’s find out. 

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What Are Payday Cash Advances?

A payday cash advance is a personal loan that helps you cover unexpected emergency expenses. These small-dollar loans are considered an expensive way to borrow because they charge triple-digit annual percentage rates (APRs). 

Lenders set their interest rates so high to offset the risk of bad credit. While other lenders will deny you funds if your score is low, direct cash advance lenders may still approve you — at a price. 

Unfortunately, these high APRs can be difficult to repay due to the payday loan’s quick turnaround. Most cash advances are due back by your next payday, giving you roughly two weeks to come up with the money. 

Since these loans pose a challenge to pay off under such short terms, many borrowers wind up needing to take out a new loan to pay off the first one. This process is called rolling over, and it can trap you into a cycle of debt. 

What Are the Bad Credit Alternatives?

Between its high cost and short terms, cash advances aren’t for everyone. If you have bad credit, it’s important you explore all your options before you sign a loan contract. Taking the time to compare rates and terms may help you find the best deal possible on the following alternatives:

Credit Cards

In an emergency, you might want to reach for the plastic in your wallet. Credit cards tend to have a lower interest rate on average than other loans for bad credit. However, be aware you could get hit with considerable fees if you use their cash advance option. 

Installment Loans

While installment loans for bad credit can also have high APRs, they come with a more relaxed term that could give you months or even years to repay what you owe. This extra time may relieve some of the pressure you would otherwise feel following a two-week turnaround. 

Line of Credit Personal Loans

If you don’t have a credit card, a line of credit provides a similar safety net. Instead of receiving cash as a lump sum, you’ll receive a credit limit. You’ll be able to withdraw as little or as much money in as many installments as you want, provided you have available credit. 

You’ll also have an option to make a minimum payment, which is a fraction of the total you owe. This can be a great option in a tight month when you can’t pay off your bill, as the minimum payment keeps your account in good standing until you can make larger contributions.

Research What’s Out There

When you have bad credit, it can seem like you have nowhere to turn to but cash advance payday loans. This financial product might work if you’re just shy of what you need, and you’ll have what it takes to repay it by your next payday. 

But don’t worry if it’s not something you think you can handle. There are alternatives out there — you just have to find them and compare their rates and terms.

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