Options Instead of Pay Day Loans

Welcome back to our modules on payday loans. What other options are available instead of taking out a payday loan? The Federal Trade Commission, a government regulatory body, focused on preventing fraudulent deceptive and unfair business practices states. The bottom line on payday loans try to find an alternative. If you must use one, try to limit the amount, borrow only as much as you can afford to pay with your next paycheck. And still have enough to make it to the next payday. Let's meet Leslie to learn more about her payday loan experience. Hi, my name is Leslie. I took out a payday loan because I had overextended myself financially. I had more bills than check. I was planning some out of town travel and needed additional money for the car rental and hotel. I know I would have to pay twice as much money to borrow. I borrowed $1000. The interest paid was $1750. I paid back over $2500. I was able to understand what I was doing because the lenders explained it, but the need outweighed the cost at the time. I needed the money to travel. I felt as if this was my only option. The payday loan place was taking the money every payday. They got their money first because my paycheck was direct deposited. My advice is that we have to better manage our finances. Plan appropriately and safe. Payday loans are a financial trap that our hard to shake off when you get tangled in them. I would advise borrowing from a family member or not doing what you want. There's never a situation big enough to submit yourself to this type of debt. It is easy to get the hard to leave. Instead of taking a payday loan like Leslie here did, here are 8 alternative options to payday loans. If you're having trouble with your monthly bills or need an extension, call your creditor or utility bill and negotiate new repayment terms or a longer timeline. You'll be surprised how many people are willing to work with you and offer an extension. Some may make it very simple by making a short extent extension and option on their website even. One of the latest trends in the world of lending is peer to peer lending, while it is mostly intended as a way to fund projects or small businesses, lenders often offer personal loans intended for debt consolidation and similar purposes. Know that your credit score will affect your chances of getting along. So if your debt has dragged your credit score down, keep listening. Help from family. Turning to family or friends is an option to borrow money, but be careful with this approach. If family are relative is willing to help you with some cash, make it a point to pay them back as quickly as possible. When you take money out of your savings, be sure to replenish it. This way, you always ensure that you have more money than you spend. It also maintains your emergency fund for future needs. Option 5, an advance from your employer. So consider talking to your employer for an advance on your salary, it's not alone, but in advance, your work is your collateral. There is no interest to pay, and all your employer can do is say no. However, carefully consider this option may strain your working relationship or send the wrong impression about reliability. Option 6, a personal loan. A personal loan can be used to cover just about anything and the interest rates on personal loans are a lot lower than on payday loans. Race for many personal loans are even lower than on credit cards. Granted, you'll pay a higher rate if you have a low credit score, but a reputable personal loan lender still won't charge 400%. Option 7, a credit card. If you already have a credit card, consider using it instead of a payday loan. While credit card rates are high, they are generally still lower than that of a payday loan. And another credit card option is a cash advance on your card. Note that though sometimes credit card cash advances have a higher interest rate than regular purchases, due to an added financial charge. Option 8 credit counseling. If your financial situation is out of control, consumer credit counseling can be a great resource to help you analyze your debt, define a realistic, personalized budget, and negotiate lower interest rates and lower monthly payments. It's important to make sure you're working with a legitimate credit counseling service and not an operation that preys on financially strapped consumers. Thank you for watching the modules on payday loans.