If you’re a cash-strapped shopper, you may have considered payday loans, which offer quick money that is due in two weeks or less. They are available at payday loan stores, check-cashing places and some pawn shops.

However, these loans come with high costs that can be difficult to pay back. Several non-profit credit counseling agencies can help you negotiate your debt and manage payments.

Costs

Payday loans can be expensive, but they may offer a quick solution to a temporary cash shortfall. Many states have laws that cap payday loan fees and rates. However, a typical two-week payday loan with a $15 fee per $100 borrowed equates to an APR of 400%.

Many of the people who use payday loans do so to cover basic expenses, such as rent and utilities. They also may be unable to qualify for PA credit cards, or their credit is damaged due to past financial problems. This means that they may not be able to pay their payday loans on time, which leads to a cycle of debt.

Local charities and churches offer a number of services, including no-cost personal loans with lower interest rates than payday loans. Credit unions and community banks also provide payday alternatives with a range of terms and repayment schedules. People should contact these organizations for more information. Credit counseling agencies may also be able to help.

Benefits

Payday loans are dangerously expensive, and they can trap people in a cycle of debt. There are safer alternatives, such as small personal loans and credit-card cash advances. Credit-card companies often charge lower rates, and you can manage your loan online. However, if you do use a payday loan, it’s important to make sure you understand the terms and conditions and work on improving your credit score.

Many credit unions offer payday alternative loans, known as PALs, which have low interest rates and repayment periods. These loans can be used to replace payday loans and can be repaid over one to six months. They also do not require a credit check, which makes them available to people with poor credit. Unlike payday loans, these loan payments don’t appear on your credit report. This allows you to pay your debt without incurring additional fees. The average PAL costs 391%-600% APR, which is significantly less than payday loans.

Time-frame

A payday loan can be used to cover urgent expenses, but it can also trap borrowers in a cycle of debt. These loans are often unsecured, and lenders often demand high interest rates. Some lenders even sell borrowers' debt to third parties for collection.

Borrowers typically write a post-dated check for the full loan amount including fees, or provide the lender with authorization to withdraw the funds from their bank account. If they fail to repay the loan on time, they may be subject to late fees and a negative impact on their credit score.

Unlike traditional mortgages, payday loans don't use standard underwriting rules to determine whether the borrower can afford a loan. The Consumer Financial Protection Bureau recently introduced changes to protect borrowers, but the Trump administration has rolled back those regulations. Consequently, payday lenders continue to lend to people with poor credit who can't qualify for other loans. This has led to an increase in payday lending stores, which often double as pawn shops.

Alternatives

There are a variety of alternatives to payday loans that may be more suitable for your needs. A personal loan from a bank or credit union, Payday Loans Farmerville for example, typically comes with a longer repayment period and a lower interest rate than payday loans. You can also borrow money from family members or get a cash advance on your credit card.

Payday loans are often considered an option when you need immediate access to cash, but they come with a high cost and trap borrowers in a cycle of debt. The fees alone on these loans cost Americans $4 billion a year. If you’re struggling with financial difficulties, seek help from a credit counselor.

You can also ask your employer for a paycheck advance or find a side hustle to earn extra income. Many apps like Thumbtack, TaskRabbit, and Rover offer opportunities to earn money for odd jobs such as assembling furniture, cleaning, or walking dogs.