Where Can I Find Alternative Payday Loans?

payday loans

While inflation has more families scrambling to make ends meet, there are better alternatives if you’re wondering how to get money before payday. Payday loans seem convenient, but they come with additional costs — often 25% or more of the loan value. But payday loan alternatives have lower fees, less interest, and lower risk. Read on to understand the risks of payday loans and viable alternatives. 

What are payday loans?

A payday loan is a short-term loan for a relatively small amount of money. Most people take payday loans for emergency expenses such as unexpected car repairs, fines, or to cover a credit card payment until a paycheck arrives. 

Short-term payday loans are marketed as a way to make ends meet. The loan’s name comes from the idea that you should only take the loan out until your next payday when you have the cash to repay the loan amount. It’s aimed at people who are in desperate need of a loan. 

There is no set definition of a payday loan, but most feature these common characteristics:

  • No background checks. Lenders may not check personal information or income.
  • Short duration. The loan is short term, usually two weeks or less. 
  • Full repayment. The loan usually must be repaid in full when it is due. 
  • High-interest rates. Expect high-interest rates. Annual percentage rates (APRs) of up to 400% or more are common.
  • High fees. Payday loans are known for high fees or service charges.
  • Rollover options. You can roll over a payday loan by paying only the fees and interest you owe on the repayment due date, extending repayment, but then you’ll accumulate more debt. 

If you cannot repay the loan on the due date, you must roll over the loan, allowing the lender to continue collecting interest. Many people who take out a payday loan underestimate exactly how much their loan will cost them if they cannot pay it back. Data from the Consumer Financial Protection Bureau estimates that 80% of people who take out a payday loan roll over their loan at least once. 

If you have to roll over a payday loan, you can likely expect to pay annualized interest of up to 400% or more on the initial amount. These loans accumulate interest much faster than other types of loans in the market, making them a very risky financial move.

How do payday loans work? 

When you take out a payday loan, first ask for the repayment terms. It’s worth asking whether you have the option to roll over the loan and only pay your interest and fees if you cannot pay the full amount. This depends on state regulations and your individual lender. 

There are several different options for short-term payday loans. They usually involve quick repayment and high-interest rates. 

Payday loan hypothetical example

Suppose you need to borrow $300. The payday lender tells you that you’ll pay a $50 fee for the loan. Your loan will also accumulate interest at a 450% APR. The loan is due 14 days later. 

At that time, you’ll need to pay back the original $300, plus a $50 fee and about $52 in interest for a total of $402 on a $300 loan, or 25% more than the original amount — in only two weeks. 

Benefits of taking out a payday loan

Taking out a payday loan can provide a much-needed financial lifeline for those in a pinch for cash. Payday loans are short-term, high-interest loans that allow consumers to borrow a small amount of money from a payday lender until their next paycheck. The main benefit is quick cash without a credit check. But for most people, the risks outweigh the rewards. The benefit of a payday loan is you get same-day cash from a short-term loan.

Risks of taking out a payday loan

The risks of taking out a payday loan can be significant and should be considered before taking out such a loan. While the Consumer Financial Protection Bureau has revoked its earlier rule on the mandatory underwriting provisions of 2017, payday loans still present significant risks.

As a borrower, you should consider carefully whether you can afford to repay the loan and check whether the lender may automatically withdraw payments from your bank account.

With a payday loan, there is also the risk of being caught in fraud. In 2022, the Federal Trade Commission covered millions of dollars for consumers caught up in payday lending schemes. But for those consumers, the damage was far more than a single check. 

Risks of a payday loan:

  • High-interest rates
  • High fees
  • No credit checks, in most cases, if consumers can afford the loan
  • Risk of predatory rollover practices for consumers who can’t afford the loan
  • Harm to credit score if you can’t pay back the loan
  • In some cases, payday lenders can use extreme tactics to collect unpaid loans, such as withdrawing directly from your bank account.  

Considerations before taking out a payday loan

You could end up paying much more for a payday loan than another type of loan. Before taking a payday loan, ask yourself:

  • Can I get a personal loan from a bank or credit union?
  • Can I borrow from a friend, family member, or colleague?
  • Can I ask my creditor for more time to pay my bills?
  • Can I put this expense on a credit card?
  • Do I have any savings that can go toward this bill?

While there are alternatives, if you need to take out a payday loan, ask the lender the following questions: 

  • What is the APR on my loan?
  • What are the fees on my loan?
  • When do I need to repay the loan?
  • What happens if I can’t repay the loan on the due date?
  • Can you offer a better APR or waive some fees?

Alternatives to a payday loan

There are safer alternatives to payday loans, from instant debit card loans to cash advances online on the same day. There are even assistance programs, and small personal loans.

Consumer loans

Consumer loans like installment loans or personal loans are a safer alternative to a payday loan. Credit unions and small loan companies will also offer more competitive rates. You can also ask local lenders, who are often more willing to offer small loans at more competitive interest rates, especially if you can prove income or have a good credit score.

MoneyLion offers a service to help you find personal loan offers based on the information you provide, you can get matched with offers for up to $50,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.

Credit cards

Credit card cash advances can be a solution to get cash fast. When you take out a credit card cash advance, you’re taking out debt against your credit card’s line of credit. They could still have a high APR for advances but usually lower fees and interest than a payday loan. They are also more convenient: You could get a credit card cash advance at most ATMs if you have a personal identification number (PIN). 

Low-cost cash advances

Some online banks and lenders offer cash advances online the same day, almost like low-interest rate payday loans without the same risk. These low-cost cash advances have fewer fees and less risk. Check with local lenders or online for low-risk or low APR cash advances as a more secure, cheaper option to a payday loan. 

Earned wage access cash advances

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Assistance programs

Many assistance programs are available to help you pay the debt or make ends meet. As a starting point, check with local organizations that offer assistance to those facing hardships. You can contact religious organizations, charities, and community centers for support. 

You may also be able to reach out to the creditor to negotiate a repayment plan. This can save you pressure and may even help your credit score. 

Finally, consider requesting a cash advance on your paycheck from your employer. If they’re willing, you won’t need to pay any interest or fees and will have access to the cash when you need it. Just make sure it doesn’t happen often.

What to look for in a payday loan alternative

A payday loan is an expensive way to borrow a small amount of money for a short period of time. For that reason, almost any payday loan alternative will be a better financial choice. Here’s what to look for in a payday loan alternative.   

Low interest

Payday loans usually have annual interest rates of up to 400%. Interest rates on a payday loan can add up to 25% or more to your loan amounts in just two weeks. These high rates can make it difficult to pay back your loan on time. If you were struggling for $300, adding $100 to the payback amount two weeks later might make it almost impossible to repay, trapping you in more debt.

When you consider payday loan alternatives, look for one with a 0% APR or at least a low APR. Some allow you to get paid on the same day, but some of these loans require you to have an account with the bank. Low-interest short-term loans are a safer alternative to a payday loan.  

Low or no hidden fees

Many payday loan providers also charge a flat fee just to take out a loan. Maximum flat-rate fees can vary by state but may cost anywhere between $20 to $75 or more.

These fees can add significant amounts to your total loan, increasing the likelihood of default or rolling over the loan. When you consider payday loan alternatives, look for lenders who offer access to cash with low or no hidden fees. 

Quick signups and deposits

One of the main reasons people go to payday lenders is for instant cash as a last resort in emergencies. But payday lenders aren’t the only way to get money quickly. 

Ask banks and lenders how long the signup period is before you commit or open an account. You should also look for a bank or lender who offers direct deposits into your account, so you won’t need to schedule a trip to the bank. Many banks offer small loans like payday loans online with no credit check.

Final Tips For How To Get Money Before Payday

Consider a payday loan a last resort. Your money is valuable: With so many options, you should be able to save the $50 to $200-plus you’d spend in interest and fees with safer loan alternatives. 

Consider personal loans, borrowing from family or friends, credit card cash advances, low-interest online loans, borrowing from savings, or assistance programs. Researching options before you need a payday loan means you know where you can get cash if you need it, protecting your family and your savings.


How much money can I borrow with a payday loan?

Payday loan amount limits vary by state, ranging from $50 to $1,000. Because of the high-interest rate on a payday loan, consider loan alternatives or a smaller payday loan. 

How long does it take to get approved for a payday loan?

You can be approved for a payday loan in as little as 15 minutes. Most payday loans are approved on the same day. 

What happens if I can’t repay my payday loan on time?

If you can’t repay your payday loan on time, you’ll risk damaging your credit score for up to seven years. You’ll also be liable for repaying the loan including additional interest. 

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