Running short of cash just before payday is not an uncommon occurrence but turning to payday loans to fund the gap is a very expensive debt mistake. You might start out thinking it's only going to happen once, but in all likelihood if you are living paycheque to paycheque and you turn to the 'convenience' of payday loans once, you'll do so again.
If you need some temporary cash, try any of these 8 alternatives to visiting a payday loan lender. Not all will work for you however each offer much cheaper borrowing options that won't see you caught in the cycle of losing $20 to $100 or more from every pay to payday lenders.
If you know someone struggling with payday loans, share this information with a friend.
If you are constantly short on cash because debt payments are eating up a sizeable portion of your paycheque before you even have a chance to pay for living costs, it might be time for some payday loan help. We can help you look at your financial situation and see if there are alternatives to get you out from under all that debt so you don't need to rely on payday loans ever again.
1. Negotiate With Creditors
In most cases your creditors will understand if you have a temporary cash flow problem. If your short on the rent, talk to your landlord. Even if they are upset, know that your landlord can't kick you out of your apartment tomorrow. If you know you won't be able to pay your hydro bill or other important payment, contact your creditor. Ask for an extension and don't be afraid to ask if they will waive the fee or forego reporting the late payment on your credit report.
2. Take Out A Small Loan
Payday lenders only lend money to people with income. If you have a steady income and haven't yet maxed out your credit options, try taking out a small loan from a bank or credit union. Be prepared to make steady payments. In addition to dealing with your short term cash flow problem, if you make all your payments on time this small loan can improve your credit report.
3. Pay With Your Credit Card
We don't like to encourage the use of credit card debt however if you really need the money for food or other living expenses this week, go ahead and use your credit card. Just don't make it a habit - using credit cards as a source of lending should be for emergencies only.
4. Dip Into Your Emergency Fund
If you have one, now is the time to use it. If you don't, try one of the other items recommended here then build one for the future. Even a small amount can help.
5. Get A Cash Advance from Your Credit Card
Cash advances can cost more money than purchases since you are charged interest from day one, but it's a much cheaper option than the 300% interest charged on a payday loan. Pay it off as soon as you can and don't charge any extra purchases until you do.
6. Sell Something Or Earn More
Ask your employer if you can work a little overtime. Consider selling any unwanted or unnecessary items on kijiji or through a yard sale for some extra cash.
7. Get Overdraft Protection
If you can, apply for overdraft protection on your chequing account. Even though you will pay interest, and perhaps fees, those costs are usually substantially less than a payday loan or bouncing cheques.
8. Borrow From Friends & Family
Though you might be embarrassed, consider talking to friends and family about your situation. Ask for a short term loan but be prepared to pay it back just like you would any other loan.