Minggu, 30 September 2012

Payday Loans - Are the Payday Loan Alternatives Better or Not?

It is always a good idea to compare all of the available options when you need to make a decision regarding your finances. The payday loans are an obvious solution in case of cash emergencies. However, there are other options that you may want to take into account. Find out more about them and how they compare to one another.

Credit cards are among the main alternatives to payday loans. Their main advantage is that their interest is lower. There are all kinds of promotional credit cards which have zero interest for a set period of time. You will still owe the sum that you borrow, but you will not have to pay interest on it and this is a great benefit. Another good thing about credit cards is that they allow you to pay your debt over time without you getting into more debt.

There is one major disadvantage of credit cards in comparison to payday loans. It is harder for you to get approved for a credit card if you have bad credit and a low credit score. There are some cards designed for subprime borrowers, but they are also not easy to get and are fairly expensive to use. Another drawback of credit cards is that even though the approval may be quite quick, the issuing of the card may take quite some time.

Many credit unions have introduced short-term loans similar to payday loans. The credit union loans are also for fairly small sums and have to be repaid in full on your next pay day. The major difference is that the interest rates are considerably lower. They are not very low actually, but there is a noticeable difference between them and the rates set by payday lenders. This is a superb advantage.

There are disadvantages to credit union loans that you should take into account. Their availability remains limited at least for the time being. They are available only in certain towns and cities and in some cases in certain areas of a single city. In addition, the approval procedure is the same as the one used when an application for a traditional loan is made. This means that there is a high chance of being rejected if you have bad debt reflected in your credit score.

The alternatives to payday loans are not perfect and may not work out for some people. The important thing for you as a borrower is to do some analysis and to choose the best option for you.

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