Whatever your financial situation may be, everyone experiences times where loans are required - sometimes expediently. This can stem from emergencies or overwhelming debt, among other things. When the need arises, it’s essential that you choose the loan option that is least likely to negatively affect your current financial situation or severely impact your future goals.

Payday loans are options that are regularly chosen by consumers who find themselves in a bind requiring urgent assistance. Unfortunately, these types of loans aren’t always given with your best interests in mind. In fact, this category of lending is often viewed as predatory and has a reputation for taking advantage of borrowers who can easily be faced with interest rates of up to 400%.

Considering alternatives to payday loans is vital before making a decision. In this article, we’ll discuss some other options that may be available to you and why they may be more helpful in your situation.

Peer-to-peer Lending

Most recently, this form of lending has grown in popularity. This type of loan allows investors to fund loans for borrowers using their personal finances. While you can secure pretty low-interest rates utilizing this loan format, it is mainly available to those that have higher credit scores.

Emergency Savings

Now may be the time to draw on your emergency savings, if available. Typically, emergency savings should be used to cover rent, healthcare, bills, groceries, and other day-to-day expenses in the case of an emergency. However, situations vary. If you don't have emergency savings, and depending on the severity of the situation, you may also consider utilizing other savings accounts.

Pay Advance from Employers

If you have a good relationship with your employer, this can be a good outlet for seeking assistance when you’re hit with a financial emergency. Going this route can be beneficial because you don’t have to worry about paying anything back or being hit with interest, it is simply you receiving your payment early with the expectation that you continue to work.

Negotiating Payment Plans

Most companies and even credit cards are willing to work out arrangements with you on payment of you are struggling. If you’re considering taking out a loan to facilitate paying your bills on time, try speaking with your creditors or utility companies first. Often, they can help you either delay when your payment is due or reduce the amount you owe with various programs they may have in place.

Credit Cards

While utilizing credit cards for emergency purposes is not highly recommended, it’s definitely a better option than payday loans. Usually, with credit cards, you won’t pay higher than 28-30%, whereas payday loans are much higher in interest.

Credit Counseling

If your financial or credit situation seems out of control, before adding to the strain, consider seeking counseling. There are various credit counseling services available to you, often at no cost, that can help. The National Foundation for Credit Counseling can help lead you to a service in your area.

Personal Loans

Taking out a personal loan through your bank or a credit union can often secure you lower interest rates - definitely lower than a payday loan! You will need to have a decent credit score typically for this type of loan, but it’s worth checking into, especially if you have a good relationship with your bank or credit union. Some credit unions even offer short-term emergency loans which members can utilize to help them become financially stable again.

Loans from Family or Friends

If you have a good relationship with your family or friends, and have not borrowed money before, you can consider asking them for help. Usually, they won’t charge you interest (or very little). However, you do need to be careful when going this route - don’t ask for too much and make sure you pay the loan back promptly and within the terms of your arrangement.