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Alternatives to Payday Loans

payday loan assistance

Payday loans can look like a good deal. But they aren’t. Here is what payday loans looks like, why you should avoid them, and some possible alternatives.

Nine Signs of an Predatory Payday Loan

8. Mandatory arbitration clause

By eliminating your right to sue for abusive lending practices, these clauses work to the benefit of payday lenders.

9. No restrictions on out-of-state banks

Federal banking laws were not enacted, so out-of-state payday lenders will try to circumvent state laws.

Other Options

But how can you avoid payday lenders when the rent is overdue and you have creditors knocking at your door?

Here are some possible alternatives:

  • A payment plan with creditors
  • Advances from employers
  • Credit counseling
  • Government assistance programs
  • Overdraft protection at a bank or credit union
  • Credit union loans
  • Cash advances on credit cards
  • Military loans
  • Small consumer loans

Some employers grant paycheck advances. Because this is a true advance, and not a loan, there is no interest. So this is much cheaper than a payday loan.

Consumer Credit Counseling

A consumer credit counseling agency can help you

to work out a debt repayment plan or develop a budget. These services are available at little or no cost. Contact a nationally accredited consumer counseling agency in your area by calling 1-800-388-2227 or visiting their online locater .

Government Assistance Programs

Many households are leaving money on the table. Are you claiming benefits through MaineCare, the Earned Income Tax Credit, the Maine Rent and Tax Refund Program, and other programs intended to help people with limited incomes who are struggling to pay their basic bills? Go to: Don’t Leave Money on the Table . This will help you to do a check up, to make sure you are getting all of the income you could be getting.

Overdraft Protection

Payday lenders claim their fees are lower than paying bounced check fees. A better alternative to getting a payday loan is to prevent bounced check fees in the first place. Most banks offer checking accounts with overdraft protection. For a small fee ($5) or no fee, banks will cover a check by moving money from a savings account.

Overdraft protection through a line of credit is also available, typically at 10 to 18% APR (annual interest rate).

Category: Payday loans

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