9 Payday Loan Alternatives if You Have Bad Credit

When you are in a financial bind and need quick access to cash, a convenient option is a payday loan. These loans don’t require a credit check and can be paid back with your next paycheck. What many borrowers might not realize is that they can have a 400%+ interest rate, plus a high origination fee near 15%, making them some of the most expensive loans you can get. If you need to borrow money, you might consider these payday loan alternatives.

Personal Installment Loans

Personal loans are a good financing alternative for any expense you might have. And, people with every credit score can apply for these loans from any bank, credit union, or money lender. If you apply through your local bank, a credit check will be required, but, your rates will be significantly lower. By making on-time payments on an installment loan, your credit score can also gradually improve.

The average interest rate for an applicant with bad credit (639 or less) is near 30%.

These loans are a better option if you have large expenses like buying a car, home repairs, or consolidating credit card debt. Most personal loans are unsecured and do not require collateral that the bank can repossess if you miss too many monthly payments.

If you want to avoid a hard credit inquiry or do not think you can get approved by your bank, you can also consider applying for a personal loan from a peer-to-peer lending platform as well.

Pull From Your Emergency Fund

Can you afford an unexpected bill with your savings? Approximately 25% of Americans cannot. If you do have money in your savings account, you can consider using that to pay your bill. Then, you can make interest-free payments back into your savings account to rebuild the balance.

Secured Credit Cards

When you pay your credit cards on-time, you can give yourself a few weeks to make the payment without interest. And, build your credit score in the process.

Secured credit cards have low credit limits, usually $1,000 or less, that can be similar to the amount you would borrow with a payday loan. You might have to pay an annual fee, but, that is still cheaper than the fees you will pay to originate the loan and renew the loan if you cannot pay it in full at your next paycheck.

See our recommendations for the best secured credit cards to have in your wallet when you need to build or repair your credit history.

Negotiate Payment Plans

When you are struggling to make payments on your current loans, you can also speak with the lender to negotiate a payment plan. They might allow you to pay a reduced payment or even skip a payment this month penalty-free!

This doesn’t mean your loan balance for the month is forgiven, it will still need to be paid in full and will continue to accrue interest, but, lenders are willing to be flexible as we all have tough times occasionally and only need a few weeks to get your financial house back in order.

These Tips for Negotiating Payment Plans can help you prepare for talking with your lender.

Ask Your Employer for an Advance

Your employer might be able to give you your paycheck early when you ask. You will need to speak with the Human Resources department if you work for a sizable company. Explain your circumstances and why you need the money a few days early.

This can be a good payday loan alternative if you only need extra money every once and awhile. Most employers are not going to get into the habit of doing regular paycheck advances because of extra paperwork on their end and they expect their employees to be responsible for their professional and personal lives.

Borrow from your Retirement Account

If you have a Traditional or Roth IRA or 401k retirement plan, you can temporarily borrow money. Some plans administrators do not allow this option, however.

You can often borrow money interest-free for the first 60 days. After that, you have up to five years to repay the loan and will pay interest on the borrowed amount. Each plan has different lending terms, so your borrowing costs can be different.

One downside to borrowing from your 401k is that the money isn’t earning interest in the stock market while until it has been repaid.

Sell Your Belongings

If you need money quick, you can always take your possessions to a pawnshop to get cash quick. You might do this if you have a guitar, speaker system, or other items of value that can be used as collateral. Once you get paid, you can buy your item back, but, there will be some pawnshop fees that can be relatively expensive.

If you have more time, you can also consider selling on Craigslist. Selling at a reduced price will get more looks and increase the odds of making a sale quickly. And, you can even earn more profit as you are avoiding the middle man by pawning your items.

Credit Counseling

You can also talk with a credit counselor if you need a plan to get out of debt. Credit counselors will not lend you money, but, they can help rearrange your finances so you don’t have to continue taking out payday loans or skipping monthly payments on your existing loans. There is a fee for using these services, but, it can still be significantly cheaper than payday loans and help you get on the right financial track as well.

Borrow from Family and Friends

Another option to consider is borrowing from family and friends. This is one alternative you might consider as your last resort as relationships can be damaged if you do not repay the loan. If you know someone that is willing to lend you money, you will need to discuss the payment details with them including the monthly payment amount, due date, and if any interest rate will be charged.


Payday loans are so popular because they are instant and convenient. In a matter of minutes, you can walk out the door with the cash you need. This convenience comes at the cost of the highest loan interest rates in the industry. There are other options that can give you access to cash with a lower interest rate.

Disclosure: The information provided by The Financial Genie is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other professional to determine what may be best for your individual needs. The Financial Genie does not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. Additionally, some of the organizations with products on our site may pay us a referral fee or affiliate commission when you click to apply for those products.

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