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  • Are there any Alternatives to Payday Loans?

    Payday loans are great way to meet any kind of emergency expenses like fixing car, paying doctor’s bill or other unanticipated expenses without any kind of collateral or credit score. This loan is available very quickly and the eligibility is also simple where the borrower must be an American citizen, must be above 18 years of age and must have a checking account at least three months old.

    Irrespective of so many conveniences with payday loans, millions of Americans are facing tough financial challenges with this unsecured loan because of the huge interest rate. Many times the interest can be as high as 800 to 900% when compared to credit card interest rates. Thus, when payday loan borrowers fail to pay their first due they are bound to face huge payment next month. This can gradually accumulate into whooping debt amount that can take long period to pay off. The worst scenario doesn’t end here as failure will lead to damaging credit scores of the borrowers that will prevent them from seeking regular loans with much lower interest rates.

    Now, the question is there any alternatives to payday loans because no matter what happens emergency expenses never arrives prior informing and the borrower should not take any steps that puts his or her future financial well-being into danger. With great relief the answer is yes. Some of the possible alternatives to predatory payday loans are requesting for an advance on paycheck from the concerned employer, borrowing money from a relative, meeting unexpected expense either with an existing credit card or applying for a new credit card. Even though credit card comes with interest rates but compared to payday loans it is much lower, Moreover, if you have good credit scores you can manage to negotiate for lower interest rates.

    Applying for a loan from credit union or small financial institution that might not have strict credit standards is a good alternative to payday loans. Filing for bankruptcy based on Chapter 7 or Chapter 13 dedicated to consumer bankruptcy is an indirect alternative to payday loans that helps with a fresh financial start as it removes all the existing debt successfully.

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