A personal loan isn’t your only option when you need some fast cash. Consider the following alternatives:
Credit cards
Credit cards can be a useful tool for quickly accessing funds. As opposed to the lump sum of a personal loan, credit cards offer a line of credit from which you can draw at will.
Card users are given a predetermined limit and only charged interest on the amount of the credit line they use. Unlike personal loans, credit cards may come with variable interest rates, meaning your interest rates may vary month to month depending on the market.
Personal lines of credit
A personal line of credit (PLOC) isn’t offered at every financial institution, but you may be able to access one if you have an established relationship with a bank.
Similar to credit cards, PLOCs offer borrowers credit on a revolving basis. Borrowers can take money out of the account during draw periods but will have to repay the funds, plus interest, once the draw period ends.
Payday alternative loans
While traditional payday loans often come with predatory lending practices, a safer alternative is a payday alternative loan.
These loans are typically found at credit unions. Payday alternative loans come with short loan repayment terms and a maximum APR of 28%, while payday loans can have APRs as high as 400%.
Borrow from family or friends
While borrowing from loved ones can present its own set of challenges, taking out a family loan from a friend or family member may save you money on interest and fees, especially if you have bad credit.
However, it’s wise to take precautions when borrowing from loved ones as this can lead to tension in your relationships, as a 2021 LendingTree survey found. Be sure to set up rates and terms ahead of time and consider writing up a legal contract that both parties sign.
Paycheck advance apps
Paycheck advance apps let you borrow money from your upcoming paycheck based on hours you’ve already worked. In many cases, these apps don’t require a credit check and don’t charge interest, though some may charge a membership fee or ask for a voluntary tip. Plus, they may also have eligibility requirements, such as being paid on a regular schedule and being paid via direct deposit. You also can’t borrow nearly as much as you could with a personal loan.
Ask about hardship programs
Before taking out a personal loan to make ends meet, you should first see if you’re eligible for financial hardship programs if you need help paying a loan or utility bill. Hardship programs may include forbearance, loan modification, temporary APR reductions or fee waivers.
Keep in mind that if you enter a loan forbearance program, you’ll still have to repay the loan in full eventually. Deferred payments may be due at the end of your loan term or at the end of the forbearance period. Plus, interest may accrue during your forbearance period, which could increase the total cost of borrowing in the long run.