If you are running low on cash and an unexpected expense occurs, such a car repair or a medical bill, you may be inclined to get a payday loan from the many online lenders that provide that service and market it aggressively. However, getting a payday loan is probably the worst financing option when you need a fast cash injection given the extortionate interest rates and financing fees that payday loan providers charge. Instead, I recommend you opt for one of the below 5 smarter financing options to consider before getting a payday loan.
Sell items you no longer need
Most of us have been meaning to sell things we no longer need (such as books, DVDs, video games, clothes, etc.) but never really get round to actually doing it. Well, if you are in the situation where you need extra cash asap then that would be the perfect time to finally do so. Pack all the things you no longer need into a big box or lay them out on your bed and start selling them one-by-one on eBay or Craigslist. You will be able to get rid of a lot of things within only a few days and you will have money coming in fast.
Borrowing money from family members or friends
Another fast financing option would be to borrow from friends or family members. Obviously, only borrow an amount you know you will certainly be able to pay back within the agreed time period. Since you don’t want your personal relationships to suffer due to temporary financial stress.
If you do decide to borrow from family or friends make sure you sign a loan agreement (you can get free loan agreement templates online), so that there are no misconceptions on how much you will borrow, what the term of the loan will be and what interest rate you will be charged.
Get a new credit card
Alternatively, you can apply for a new credit card and use it pay for the emergency expense. Opening a new line of credit will most likely lower your credit score, as it increases your credit utilization ratio and your overall level of debt. But in an emergency situation, it will most likely be worth dropping a few measly points on your credit score to cover the expense.
Negotiate a payment plan with your creditors
Another alternative to getting a payday loan would be to negotiate a more accommodative repayment plan with the companies you owe money to (your creditors). You will be surprised how easy to can be to negotiate payment plans, as companies are more interested in getting their money back over a longer period of time than engaging in legal action against you to claim back the money owed.
Get a loan from a credit union
You could also contact one of your local credit unions and take out a personal loan if you credit score allows it. Credit unions are your best bet for a personal loan with a reasonable interest rate, especially compared to the extortionate rates that payday loan providers charge.
