Losing your job can put you in a tough spot, especially if you don’t have a large emergency fund built up to cover your expenses while you get back on your feet. While a side hustle can help you come up with cash in the meantime, it’s not always enough.
One common loan option people in desperate times often go with is a payday loan. These loans carry very high interest rates, but they’re easy to obtain and you can often get money the same day. However, those interest rates make these a poor solution as anything other than a last resort, and you may not even be able to get a payday loan without a steady paycheck. If you’re in dire straits, here are a few payday loan alternatives to consider:
- Personal Loans
If you have a solid credit score and you’re bringing in enough cash through your side hustle, you may still qualify for a personal loan. There are several different places where you can apply for a personal loan, including:
- Credit unions
- Peer-to-peer lending sites
Of those options, peer-to-peer lending sites are the most flexible regarding minimum lending requirements, but you’ll still need a decent credit score and steady income. If you can obtain a personal loan through a bank, credit union or a peer-to-peer lending site, it’s one of your better options, as these loans usually have low to moderate interest rates and terms of 1 year or more.
- Credit Cards
While it’s not ideal to run up a balance on your credit cards, the APR could be better than your loan options. It will certainly be much better than you’d get with a payday loan. You may even want to apply for a 0-percent APR credit card. You’ll need good credit for this, but if you’re approved, you’ll have the length of the introductory period to pay off any transactions you put on the card, and the standard introductory period length is 12 months.
You can use a credit card to pay most of your bills. What if you need cash? A cash advance is one option, but this will carry a fee and a high APR. There are also companies available that allow you to make payments to any party using a credit card for a small fee. Plastiq is one option, and it charges a 2.5-percent service fee. You can use Plastiq to pay your mortgage, rent or essentially anything that you’d normally pay in cash.
- Title Loans
If you have a vehicle in your name, you can most likely obtain a title loan. With this type of loan, you’re using your car as a form of collateral and giving the lender your car title while you repay the loan.
Like payday loans, title loans should only be used as a last resort, because they almost always have very high interest rates and short terms, with the standard term on a title loan being 30 days. If you’re confident that you can find a new job or make enough through your side hustle to pay back your title loan by the due date, then it may work out for you. Otherwise, you’ll be stuck rolling over your loan by paying off just the interest and carrying the loan principal to another repayment period with another interest charge. Most title loan borrowers need to do this multiple times and end up paying a large amount of interest.
You’re also risking your vehicle when you borrow a title loan. These loans are convenient and can help when you’re in a jam, but be careful and do your homework before you apply for one.
Sometimes all you need is some extra cash to climb out of a bad situation. If you’ve lost your job, consider those payday loan alternatives to stay afloat.