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17 Payday Loan Alternatives for 2024
Payday loans are part of a predatory industry that takes advantage of its position as a last resort for millions of Americans in dire financial straits.
If you find yourself in that position, you have more options than you think. Tons of payday loan alternatives can help you get the money, resources or help you need to make it to your next payday — and set yourself up with a financial cushion for the future.
A payday loan, or cash advance, is a way to borrow money immediately against your expected earnings. These short-term loans come from private companies, not credit unions or banks.
Usually, to qualify for a payday loan you need to show some recent pay stubs to vouch for your income history, but you won’t have to go through a credit check. Loans are typically a few hundred dollars at most and come with a flat fee.
Payday loans usually come due with your next paycheck, and the lender might connect to your bank account to automatically withdraw the amount owed on the due date. If you don’t have the money to repay on the due date, you can usually extend the loan another paycheck for an additional flat fee plus a late fee.
We know that, despite the critiques from personal finance experts, high-interest payday loans make sense for a lot of people. Around 12 million Americans use payday loans each year.
People without college degrees and those earning less than $40,000 a year are most likely to take out payday loans — it’s no big surprise you’d be scraping by between paychecks in those circumstances. And 69% of payday loan borrowers use the money to pay for recurring expenses like rent, food or bills. Another 16% spend the money on unexpected expenses.
You might have already exhausted your options to borrow interest-free from family or friends — or they don’t have the resources to help, or it’s not safe to ask them. When you’re looking at a growing pile of financial obligations on a low income, facing consequences like eviction, the TV ads and flashy storefronts offering quick cash look pretty promising.
Most payday loan borrowers are aware of the high costs and drawbacks of payday loans, including fees that amount to an annualized interest rate of 400% on average.
Payday loan fees might look reasonable at first. The Consumer Financial Protection Bureau says a typical fee is about $15 for every $100 borrowed.
But if you don’t repay the loan by the original due date — usually within two weeks or your next payday — you’ll owe a late fee, plus another $15-per-$100 fee for the extended loan. And again, if you don’t repay by the new due date. And so on.
These high costs, especially compared to other ways of borrowing, are why financial experts recommend you avoid payday loans if you can.
Click the links to jump to full descriptions of each below.
1. Non-profit charities
2. Emergency public assistance programs
3. Peer-to-peer loans
4. Crowdfunding
5. Pawn shop loans
6. Payday alternative loans from credit unions
7. Secured loans
8. Personal loans
9. Lending circles
10. Credit card cash advance
11. Paycheck advance from your employer
12. Advances from loan apps
13. Loans from your bank account
14. Overdraft protection
15. Payment plans and bill negotiation
16. Redirect debt and savings payments
17. Ways to make money fast
Before turning to the lender in the corner store, consider these alternatives to payday loans to see if any of them can offer the financial relief you’re looking for — without incurring the high costs.
Tons of local and national charities exist to support people in need, including:
The U.S. government continues to take applications and distribute funds through Emergency Rental Assistance programs launched in response to the pandemic economic crisis, though your financial hardship may not need to be directly related to the pandemic.
Find your local, state or tribal program through the U.S. Treasury’s Emergency Rental Assistance directory to find out how to apply for assistance.
Apps that let you borrow small amounts of money from regular people making loans could be an important alternative to payday loans. Here are some options:
Traditionally, crowdfunding is designed to let an audience support creators. But GoFundMe has distinguished itself from the crowd as the place for fundraising for individual needs or causes.
You start a fundraiser on GoFundMe by creating an account and sharing your story. Share the fundraiser with people you know through social media, email or direct messages to ask for donations. You can request withdrawals as soon as you start receiving donations — you don’t have to wait for the end of the fundraiser — and get the money in your bank account in two to five days via ACH transfer.
You can raise money for just about anything on GoFundMe, or try these platforms for more specific needs:
You’re probably aware of the option of pawning items you own to put some money in your pocket. In many cases, you can then buy back your item from a pawn shop if you recoup your money before it sells to someone else.
Pawn shops in some areas also give out loans, using your pawnable items as collateral. Compared with secured personal loans, these are usually for a much lower amount, like $150, with terms of just one or two months. You won’t be charged an interest rate, but instead a flat fee that could compute to a pretty unattractive interest equivalent.
Got a federal credit union nearby? If you’re a member or eligible to be — which often depends on your state or county of residence, but may not require anything at all — look into its payday alternative loan (PAL) options.
Payday alternative loans can be available as soon as you establish membership with the credit union — which, in some cases, you could do today just by walking in and signing up. They’re any amount up to $2,000, with terms of one to 12 months and interest capped at 28%.
If your credit score is preventing you from getting a traditional personal loan or a credit card, you might still be able to qualify for a secured loan to get the cash you need.
A secured loan is one backed by collateral — i.e. something you put on the line to show the lender you’re good for repayment. If you don’t repay on time, the lender could take possession of your collateral and sell it to recoup some of the loss.
If you expect to have trouble repaying the loan as scheduled, don’t take out a secured loan. It would put your asset at risk and possibly hurt your financial situation rather than help.
Types of secured loans include:
You could try to borrow a personal loan without putting up collateral, which is much less risky and usually requires a better credit score. If you don’t qualify on your own, a co-signer or co-borrower with a higher credit score could help you get approved.
Browse our list of bad credit loans to see if you might qualify for this kind of funding.
In particular, SeedFi’s Borrow and Grow loan lets you borrow between $300 and $4,000 with same-day funding and sock away an additional $650 to $4,000 as you repay. Payments are $40 to $160 every two weeks, aligned to your paydays. (SeedFi is available in 35 states and Washington, D.C.)
This isn’t an option if you need cash today, but once you’re on more stable financial footing, a lending circle could help you prepare for unexpected expenses in the future.
A lending circle is a small group of people who contribute to a pot and take turns receiving a loan from the pot. Here’s how it works:
A lending circle is basically a way to work with a community to build a small savings fund. The benefit is that you could have access to the funds sooner than you’d be able to save the money yourself. The drawback is that payouts are made on a rotation, so this isn’t a perfect option to count on for emergencies.
You can start a lending circle with any group of people who are interested, or sign up with an app like Mission Asset Fund to connect with a new community.
If you have a credit card with an available balance and need money for a rent payment or other cost you can’t pay directly with the card, you could pull out a cash advance against your available credit.
Check your credit card agreement (or summary in your online account) for details on cash advances. They’re often capped at a lower amount than your full credit limit, might come with a withdrawal fee and sometimes incur a higher interest rate than your normal credit card use.
Some small employers might be willing to offer you an interest-free advance on your upcoming paycheck when you need money, which could save you a ton of hassle and cost on payday loans. Some larger companies might even use payroll platforms that have built-in options for a paycheck advance — so you don’t have to talk to your boss about your financial needs.
Check your employee handbook or talk to someone at work you trust to learn your options for a direct paycheck advance.
Lots of apps are built specifically to help you access money you’ve earned as early as possible. They can take a little time to get set up and approve you for borrowing, so these might not be the right solution if you need money now, but could help in the future.
You might have to go outside of your own bank account to find the cash you need. Plenty of traditional and online banks offer ways to get interest-free cash advances when you need them.
Overdraft “protection” from banks gets a bad rap because of high fees — and that’s fair. But don’t necessarily discount this option if your bank offers it. Just use it intentionally.
An overdraft fee is charged per transaction, not as a percentage of the transaction. A major payment, like rent, could cost you less with a one-time $35 fee than a high-interest payday loan.
Even better, prepare for the next time you’re in tough financial straits by asking your bank about overdraft protection options. You might be able to connect a savings account for free automatic transfers, set up a line of credit or have access to a program like SpotMe® with Chime, which covers overdrafts up to $200 with no fees.
Are you worried about cash because of a looming utility or medical bill? You might not have to pay it — or, at least, not all of it and not by the current due date.
You can negotiate medical bills and other bills by contacting the provider. They usually offer options few people know about (because they don’t advertise them).
Ask for a payment plan — and don’t be afraid to quote a low monthly payment you’re comfortable with! We’ve heard of people getting bill collectors off their back with payments of just $25 or even $1 per month. You can also ask for an extended due date or to change the due date in the future to one that lines up better with your paydays.
Kudos if you’re committed to your financial goals — but be careful not to stick to them to the detriment of your day-to-day finances.
We definitely recommend tapping a savings account before taking out a pricy payday loan. (If you have access to a more reasonable loan, the pros of building your savings might outweigh the cons of taking on debt; do what makes sense for you.)
If you’re paying more than the minimum payments on any debts, this could be a good time to pause and pull back on that, especially if those debts are lower interest than a payday loan. Use your cash flow to cover your costs now, and return to your financial goals when you’ve got more breathing room.
You might even benefit from pausing payments on some debts for a month or two so you can get your head above water. Contact your credit card company or lender to talk about economic hardship options — you may be able to defer your payments a few months without incurring late fees or defaulting on the loan.
Finally, if you find yourself running out of money before payday — especially if this isn’t your first time — consider ways you could make extra money to boost your bottom line.
Try these tips to put money in your pocket today without borrowing or asking for assistance. And consider creating a side hustle to earn money doing something you enjoy, if your life has room for it.
You’re not alone if you already have an outstanding payday loan and you’re seeking additional funds. As much as 70% of payday loan borrowers take out a second loan within a month.
This ongoing debt cycle is what leads to exorbitant fees… which balloon your costs and make it harder to get out of the cycle. Worse, another predatory industry — debt relief — will be knocking on your door soon, offering you overblown promises that are hard to say no to.
If you’re sitting on debt that feels like it’ll never budge, steer clear of those cold callers and look into these legitimate options for payday loan relief:
Payday lenders serve a purpose for a lot of families. But they’ve taken advantage of the need in low-income communities for decades, offering short-term bandages to long-term, systemic wounds.
No solution is ideal when you’re pursuing it out of a need to make ends meet, but we want you to know all the options on the table before opting for the shop on the corner with the loudest ads.
1. What are emergency financial aid options available besides payday loans?
Emergency financial aid can come from non-profit organizations, government assistance programs, and emergency public assistance. These options often provide immediate financial help for those in urgent need without the high costs associated with payday loans.
2. Are there any short-term borrowing options that are safer than payday loans?
Yes, alternatives like credit union microloans, interest-free cash advances from loan apps, and peer-to-peer lending networks offer short-term borrowing options. These are generally considered safer and more affordable than payday loans.
3. How can I find low-interest personal loans as an alternative to payday loans?
Low-interest personal loans can be found at credit unions, online lenders, and through some banks. Improving your credit score and comparing offers from multiple lenders can help you secure a lower interest rate.
4. What are peer lending networks, and how do they work?
Peer lending networks, or peer-to-peer lending platforms, connect borrowers directly with individual lenders. Borrowers can receive loans at lower rates than traditional banks or payday lenders, and lenders can earn interest on the funds they lend.
5. Can community lending programs help me avoid payday loans?
Yes, community lending programs offer loans with favorable terms to members of specific communities or groups. These programs aim to provide financial support without the high fees or interest rates associated with payday loans.
6. What should I consider when looking for alternative lending solutions?
When exploring alternative lending solutions, consider the interest rates, fees, repayment terms, and eligibility requirements. Look for options that offer financial flexibility without compromising your long-term financial health.
7. How can budgeting and financial planning prevent the need for emergency loans?
Effective budgeting and financial planning can help you build an emergency savings fund, reducing the need for emergency loans. It also helps in managing expenses and saving for future financial goals.
8. What are debt consolidation options to manage payday loan debt?
Debt consolidation options include taking out a personal loan to pay off multiple high-interest debts, using a balance transfer credit card, or enrolling in a debt management plan. These options can simplify your payments and potentially lower your overall interest rate.
9. Are there flexible repayment options for payday loan alternatives?
Many payday loan alternatives, such as personal loans from credit unions and advances from loan apps, offer flexible repayment options. These can include extended repayment periods, lower interest rates, and adjustments based on your financial situation.
10. How can I access direct financial assistance programs?
Direct financial assistance programs are available through government agencies, non-profits, and community organizations. They can provide support for rent, utilities, food, and other emergency expenses. Research local and national programs to find one that fits your needs.
11. What are no-collateral loans, and how do they differ from secured loans?
No-collateral loans, also known as unsecured loans, do not require you to put up any assets as security for the loan. This contrasts with secured loans, where assets like your car or home might be used as collateral. Unsecured loans might have higher interest rates due to the increased risk to the lender.
Dana Miranda is a Certified Educator in Personal Finance®. She’s written about work and money for publications including Forbes, The New York Times, CNBC, The Motley Fool, The Penny Hoarder and a column for Inc. Magazine. She founded Healthy Rich to publish stories that illuminate the diversity of our relationships with work and money.
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