The economy is still struggling and many people need money advances for financial emergencies, and while payday lenders offer one option, there are others. .
1. local credit union loans
For example, the North Carolina State Employees' Credit Union launched a Paychecky Advance Loan program in 2001 which offers loans without fees at 12 percent interest. If you are a member, you are allowed to borrow up to $500 per month, which has to be paid back out of the next paycheck, which is like a cash advance loan. These loans also come with a rainy day fund requirement of 5% of the value of the loan.
In 2005, Goodwill and a local credit union in Wisconsin, Prospera Credit Union announced a program called GoodMoney to give consumers a short term cash solution and all sorts of credit, debit, budgeting and other financial advice.
2. Loans from small banks
Banks also are beginning to offer lower-cost alternatives to money advance loans. In early 2008, the Federal Deposit Insurance Corp., or FDIC, launched its Small-Dollar Loan Pilot Program, a two-year case study designed to illustrate how banks can profitably offer affordable small-dollar loans as an alternative to high-cost financial products, such as payday loans.
The project included 31 banks across the United States offering loan amounts of up to $1,000 with interest capped at 36 percent and payment periods that extend beyond a single paycheck cycle
The average loan was $700, and the average payback period was 10 to 12 months.
The average NSDL customer took out a loan amount of $1,700, and the average loan length was 14 to 16 months.
Both loans' interest rates averaged around 13 and 16 percent, but the typical rate was 18%
About half of the banks charged an origination fee (average fee was $31 for SDLs and $46 for NSDLs), and when this fee was added to the interest rate, all banks were within a 36 percent annual percentage rate.
The key was that the financial institutions were giving consumers the chance to get short term loans with much lower standards than banks would typically require and eliminate hidden costs, including prepayment fees, closing costs or other fees.
Counseling for Consumers About Credit
If you need a payday loan, you can't benefit from credit counseling in the short-term, but you need a credit counselor to help you to start planning to avoid need short term loans in the future. It is critical that your counselor is aligned with the National Foundation for Credit Counseling, a reputable foundation that offers consumers free courses related to every aspect of your financial situation: budget counseling, debt management planning, and mortgage default or rent delinquency counseling.
Other options
Getting a credit card cash advance will likely cost 25-30% annualized, but that is much better than an expensive quick cash advance. Also, try and discuss your situation with each creditor (utility company, auto loan company, landlord, etc.). The vast majority of creditors would
rather work out a deal than pursue litigation. Your last option should be a money advance.
1. local credit union loans
For example, the North Carolina State Employees' Credit Union launched a Paychecky Advance Loan program in 2001 which offers loans without fees at 12 percent interest. If you are a member, you are allowed to borrow up to $500 per month, which has to be paid back out of the next paycheck, which is like a cash advance loan. These loans also come with a rainy day fund requirement of 5% of the value of the loan.
In 2005, Goodwill and a local credit union in Wisconsin, Prospera Credit Union announced a program called GoodMoney to give consumers a short term cash solution and all sorts of credit, debit, budgeting and other financial advice.
2. Loans from small banks
Banks also are beginning to offer lower-cost alternatives to money advance loans. In early 2008, the Federal Deposit Insurance Corp., or FDIC, launched its Small-Dollar Loan Pilot Program, a two-year case study designed to illustrate how banks can profitably offer affordable small-dollar loans as an alternative to high-cost financial products, such as payday loans.
The project included 31 banks across the United States offering loan amounts of up to $1,000 with interest capped at 36 percent and payment periods that extend beyond a single paycheck cycle
The average loan was $700, and the average payback period was 10 to 12 months.
The average NSDL customer took out a loan amount of $1,700, and the average loan length was 14 to 16 months.
Both loans' interest rates averaged around 13 and 16 percent, but the typical rate was 18%
About half of the banks charged an origination fee (average fee was $31 for SDLs and $46 for NSDLs), and when this fee was added to the interest rate, all banks were within a 36 percent annual percentage rate.
The key was that the financial institutions were giving consumers the chance to get short term loans with much lower standards than banks would typically require and eliminate hidden costs, including prepayment fees, closing costs or other fees.
Counseling for Consumers About Credit
If you need a payday loan, you can't benefit from credit counseling in the short-term, but you need a credit counselor to help you to start planning to avoid need short term loans in the future. It is critical that your counselor is aligned with the National Foundation for Credit Counseling, a reputable foundation that offers consumers free courses related to every aspect of your financial situation: budget counseling, debt management planning, and mortgage default or rent delinquency counseling.
Other options
Getting a credit card cash advance will likely cost 25-30% annualized, but that is much better than an expensive quick cash advance. Also, try and discuss your situation with each creditor (utility company, auto loan company, landlord, etc.). The vast majority of creditors would
rather work out a deal than pursue litigation. Your last option should be a money advance.
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