If you’re on a tight budget, making ends meet can be an uphill battle. If there’s anything that can make this struggle even harder, it’s an unexpected expense.
Maybe your cat swallows an elastic band and needs emergency vet care. Or perhaps your car refuses to go past 40 MPH, so an unexpected trip to the mechanic’s workshop is in store.
A sick pet or stalled car requires a fix right away. Like many emergencies, they’re non-negotiable, time-sensitive expenses you need to take care of now, even if you don’t have a cash cushion or great credit.
If you run out of money before payday, a payday cash advance sounds like the perfect solution. But is it?
What Are Payday Cash Advances?
The financial experts at MoneyKey describe payday cash advances as small-dollar, short-term loans. Like their name suggests, these loans advance you funds until your next payday.
Advances come from a variety of banks and online direct lenders, but they all have these three things in common:
- Funds: Most advances are around $500 or less, making them ideal for minor repairs or medical expenses but not large purchases or complicated renovations.
- Terms: Due back at once by your next payday, most cash advances have a two-week term.
- Cost: Payday cash advances are designed to help people with bad credit, so they tend to have higher rates and fees. The typical payday loan costs $15–20 for every $100 you borrow, translating into a triple-digit APR.
This high cost may be justifiable in an emergency, but the payday cash advance’s short turnaround exacerbates how unaffordable they can be on a tight budget.
Luckily, there are other options out there, even if you have bad credit.
Borrow from a Friend
This might be an option if you have a good relationship with a friend, but it requires knowing someone who has a better handle on their finances.
If a loved one is willing to help you in an emergency, make sure to treat this like a legitimate personal loan, setting clear expectations about when you have to repay what they lend.
Take out an Installment Loan for Bad Credit
Money can sour even the best relationships, so it makes sense if you don’t want to ask this of your friends. Luckily, there are online installment loans for bad credit that are available in emergencies. While they may have similar high interest rates due to your low score, they have a longer-term to offset their costs.
As online loans with monthly payments, you may have weeks, months, or even years to repay what you owe. This will break down your loan into multiple payments, so you don’t have to drum up the money in one lump sum like a payday cash advance.
Use Your Credit Card or Line of Credit
This option works only if you still have room on your card. You can request a cash advance through this account, usually at a similar interest rate as your normal charges. However, be sure to read the fine print. Most credit card companies will charge additional fees for taking an advance this way.
If you don’t have any available credit on this account, you might want to research online lines of credit as an alternative.
Bottom Line
Alternatives to payday cash advances exist, so spend some time researching how they differ before you borrow a single cent. Your time comparing rates and terms might help you find a better solution to your financial problem.