Alternatives to Payday Loans

In these tough economic times, many people find themselves turning to payday lenders like SolidCashSolutions to meet short-term financial obligations. There has been a lot of press about these businesses recently, as a house bill was defeated that would have limited both the amount of payday loans consumers could have at one time and the number of times a loan could be rolled over. These initiatives were aimed at helping consumers, who often pay back more than double the original loan amount due to industry-standard interest rates of 390% – 780%.

Because of these lending practices, payday loan operations are now banned in 15 states and the District of Columbia. But cash-strapped consumers can just as easily now turn to the web to find payday lenders, many of whom aren’t even based in the United States and who avoid federal and state oversight by operating online. Since 90% of the industry’s revenues come from repeat payday loan business it is important to consider alternatives to payday loans before getting hooked into a cycle of debt.

First, an ounce of prevention: before you find yourself in need of a payday loan, start a savings account. Many employers will direct-deposit funds into your account each pay cycle. Doing it this way means you won’t even see the money before it gets tucked away. Having something to fall back on when times are tough is a great way to avoid getting trapped in the payday loan cycle.

But what if it’s already too late for that? You’re in the midst of a cash crunch. Still, a payday loan may not be your only option. See if you can get a cash advance from your employer. Also, look into getting a cash advance from your credit card company. While the fees and interest may seem high at first, compare the total cost to the long-term costs of rolling over a payday loan 12 or more times. If those options won’t cut it, contact your utility company or creditor to see if they will work with you on an extended repayment plan. While this does take some time and can be an uncomfortable conversation, it can often be done at little or no cost to you.

If you’ve done all these things and still need cash, consider other types of lenders before walking into that payday loan office. Talk to a friend or family member about giving you a short-term loan. Check with your religious community to see if they can help. And contact social service organizations that service your community. There are often options out there that most people don’t know about that could help out during a crisis. Lastly, consider asking your bank, credit union, or financial services organization about a small loan. Often they have terms that are much more agreeable than payday loan companies, and getting such a loan can help you build or reestablish good credit.

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