A Better Alternative to Payday Loans

A Better Alternative to Payday Loans

We would all love to have a nice, robust savings account that could help us make it through just about any emergency, but the reality for most people is that we are working to make it from one paycheck to the next and surprise expenses can be a real drain on our finances. Unfortunately when those surprises expenses do come most people are unaware of option to get cash quickly and turn to one of the most expensive options available: the payday loan.

The High Cost of Payday Loans

A small, short-term loan is exactly what you need to get through an emergency, but payday loan costs can really add up over time. The process involves writing a post-dated check, or signing an agreement to have an amount withdrawn from your bank account after you get your next paycheck before you walk away with cash in hand.

The problem is these loans often come with high fees, and you may find that when the next pay period rolls around you don’t have enough cash to cover your previous debt plus future expenses, and have to roll over the loan (for an additional fee), or take out another loan. In fact, the average borrower takes out eight payday loans every year, which is about one every six weeks, with average interest costs over $500 annually.

A Better Alternative

The best alternative to a payday loan is a more traditional installment loan that comes with fixed monthly payments, and an interest rate much lower than payday loan fees. These loans provide a clear outline of exactly what you will be paying, and how long it will take to pay off the debt.

While you can go to a bank or credit union for a personal loan, the process can take several days, or even weeks, which doesn’t work if you need cash quickly. You may also need to put up some type of collateral to get an affordable interest rate on that kind of loan.

Signature loans are another option for people who need cash today but cannot get it through a traditional bank, and don’t want to get a payday loan. These short-term loans offer several benefits, including:

  • A quick application and approval process
  • Cash available in as little as 15 minutes
  • No checking account required to qualify
  • Lower interest rates and fees than payday loans
  • Only your signature is needed—no proof of assets

These loans are ideal when you need to cover short-term emergency expenses or avoid excessive overdraft fees from the bank. Most loans will require proof that you are currently employed, that you reside in the state where you get the loan, and that you have a valid ID and social security number. After that all it takes is a few minutes to approve the loan and get the cash you need.

Don’t fall victim to the debt trap of payday loans—find out how a signature loan could help you get back on your feet after a financial emergency today.

4 Things to Do Before Getting a Title Loan

Most people will experience a time when they need some additional cash and are unable to get it through the more “traditional” lenders, such as banks or credit cards. When that does happen it’s important to know what options are available to help you secure the money you need to pay those emergency bills or make ends meet at the end of the month. One option that many people have discovered is a title loan in Utah. Before you go out and get a title loan, though, here are four things you should do first.

1: Identify What You Need

Getting into any kind of unnecessary debt is a bad idea, so before you go out and get a loan for the maximum amount you would be qualified to get based on the value of your car or other vehicle, it’s best to sit down and determine how much you will need. This allows you to avoid taking out a larger loan than you require, which would add to the debt you have to repay and could put you in a difficult financial situation down the road.

2: Understand the Repayment Terms

The next step is to make sure you clearly understand the repayment terms, and check that those terms fit with your own ability to repay the loan. Some title loans can be temporary, and might work in a situation where you know you have an influx of cash coming soon but need access to that money before it will arrive, while others will allow you to pay over a period of time, which would work better for someone who might need to pay a portion of the loan back out of each of the next several paychecks. You also want to make sure you understand how interest is calculated, how much that will add to your total obligation, and any fees that you might encounter, such as early repayment fees.

3: Set Up a Clear Repayment Schedule

One of the most important things about taking out a loan is being able to repay it. If you are unable to meet the payment requirements, it can cause a lot of financial trouble for you down the road. Instead, make sure that you have a clear repayment schedule and that you stick to it (as much as possible) to avoid additional fees, extra interest, and added costs for your title loan.

4: Get Your Paperwork Together

Title loans are easy to get, and offer an option that will allow you to access the cash you need quickly (usually in less than 24 hours), but they do require some paperwork. Getting it together before you go to apply for the loan can streamline the process. You may need some or all of the following:

  • A clear title for your vehicle that includes your name
  • A form of identification (driver’s license, passport, government photo ID, etc.)
  • Proof of income that would allow you to repay the loan
  • Title loan application
  • Banking information (such as a routing number and account number)

Utah Money Center wants to make sure that you have options when you need cash quickly, but before you show up to get a title loan, make sure you’ve taken these four steps so you’re prepared with the right paperwork and the right information to get the loan you need.