Service members and their families do so much to serve our nation that it is surprising to find that they are being unfairly targeted by predatory lenders. But it is in fact the case. The Consumer Federation of America recently published a report which noted that predatory lenders target service members and their families.
Predatory lending is a huge problem because it can lock individuals and families into a cycle of borrowing at very high interest rates. Payday loans are the worst kind of predatory loans. They usually charge excessively high interest, start accruing interest immediately, and often force people to borrow again and again to keep paying off these short-term loans.
But they can seem very tempting if you’re in a tight spot and need some quick cash. Fortunately, there are other alternatives available for private citizens and the military. Here are 7 payday loan alternatives to check out:
Alternatives accessible to all
Whether you are in the military or not, you have alternatives to payday loans. Here are some options to consider:
1. Get a personal loan
Personal loans can take a little longer, but with today’s technology, you can have money within business days. Check personal loan aggregation sites like Fiona Where Monevo to compare the loans you may be eligible for.
Some personal loans will have a fairly high interest rate, especially if you don’t have a good credit rating. However, they will almost always have a better interest rate and better terms than a payday loan. And you can usually deposit money into your personal bank account within two to three business days.
Related: Find the best personal loan for you
2. Look at introductory APR credit cards
If you have decent credit and are in dire financial straits, consider credit cards with a low initial APR. These cards often come with an introductory APR of 0% for the first few months of card ownership. You can use this card to bill your emergency expenses and then pay them off without having to pay interest.
Some of these cards are available to those with medium to high credit. It is therefore worth considering even if you do not have excellent credit.
Again, however, accessing this money can take anywhere from a few days to a few weeks. So, if you need cash immediately, consider one of the other options on the list. Then, if you qualify for a 0% introductory APR, you can transfer the outstanding debt onto it so you can pay it off without paying as much interest.
3. Get a credit card cash advance
If you already have a credit card with available credit, consider getting a cash advance on your card. A cash advance will have a higher interest rate – often much higher – than your standard APR. And it will usually charge a fee of $5-$10 to withdraw money. However, it gives you quick access to cash at an interest rate that’s likely lower than what you’ll get with a payday loan.
And, again, if you then qualify for a card with an introductory APR of 0%, you can consider transferring your balance to it to ultimately save big on interest.
Related: Best Cash Advance Credit Cards
4. Look into alternative payday loans
As payday loans have become increasingly problematic, payday loan alternatives (PAL) have emerged. These loans are often available from credit unions and allow you to borrow a small amount of money for a short time at a much lower interest rate than payday loans. If you are already a member of a credit union, find out if you can access a program like this.
Some companies also specialize in alternative payday loans for military members and families, in particular. These companies are often backed by nonprofits seeking to tackle the payday loan crisis in low-income areas or around military bases.
Related: Apps that lend you money now Alternatives to payday loans
5. Get an advance on your salary
Finally, you can check with your employer if you can get a salary advance. You can often repay payday advances over time and you probably won’t have to pay much interest, if at all. If you qualify, a payday advance may be the ideal alternative to a payday loan.
Military Specific Alternatives
The options above are available to everyone, military or not. But if you’re in the military, you may have access to some even better options.
6. Review military-specific personal loans and SCRA benefits
Some military entities offer personal loans which are often available at a lower rate. For example, USAA offers personal loans specifically for active duty military. The loans have flexible repayment terms and generally low APRs. And they have no origination fees, which means the money you borrow is all you have to pay back. Military branch credit unions typically offer similar deals.
Other traditional lenders also offer Military Civil Aid Act (SCRA), which can cap interest rates on personal loans at as low as 6%. That’s a lot less than what you’ll find with payday loans! Many traditional lenders, including OneMain Financial, Capital One, and Discover, offer SCRA benefits to eligible service members.
However, the typical application process for these loans may not include SCRA information. If not, you should call the lender directly to find out how to get a low interest personal loan as an active duty military member. The savings are well worth the extra phone call it takes to get these benefits.
Again, remember that the personal loan application process can take longer than getting a payday loan on the same day. One option here is to charge your emergency expenses to a credit card and then pay them off with the personal loan. Or if you absolutely need to get an emergency payday loan, apply for a personal loan right away to pay it off. Then you can quickly break the cycle of short-term, high-interest borrowing.
7. Check out military aid groups
Finally, each branch of the military has its own relief or aid group, and many of these entities offer quick alternatives to payday loans. Here’s what you can expect from each group:
- Army Emergency Relief – Service members and immediate family members can apply for interest-free loans from Army Emergency Relief for emergency travel, healthcare expenses, essential furniture, minor home repairs, appliance maintenance and other urgent expenses. There is no maximum amount for these loans and you can get help the same day you apply.
- Navy and Marine Corps Relief Society – This company offers a variety of rescue and assistance options to members of the Navy and Marine Corps. But the fastest option is the Rapid Assistance Loan, which is an interest-free loan of up to $500 that must be repaid within 10 months.
- Air Force Aid Society – AFAS has a variety of emergency assistance options. Standard assistance may include a loan or grant in tandem with financial counseling and budgeting assistance for emergencies. Falcon Loans are accelerated interest-free loans of up to $1,000.
- Coast Guard Mutual Assistance – Coast Guard members can access a variety of financial aid, including financial counseling and adoption assistance. But if you are in an emergency, the quick loan program is probably the best option. It offers an interest-free loan of up to $1,000.
Alternative options for payday loans are available to everyone. And service members — active duty, retired, and their families — have access to even more and better options than most people. If you need cash fast, skip the payday loan store and try these alternatives instead.