Mmilitary personnel and their families do so much to serve our nation that it is surprising to find that they are being unfairly targeted by predatory lenders. But it is, in fact, the case. The Consumer Federation of America recently released a report indicating that predatory lenders are targeting military personnel and their families.
Predatory loans are a huge problem because they can lock individuals and families into a cycle of borrowing at very high interest rates. Payday loans are the worst type of predatory loans. They usually charge excessively high interest, start earning interest immediately, and often force people to borrow over and over again to keep paying off those short-term loans.
But they can seem very tempting if you are in a tight spot and need some quick cash. Fortunately, there are other alternatives available for private citizens and the military. Here are 7 payday loan alternatives to check out:
Alternatives accessible to all
Whether you are in the military or not, you have alternatives to payday loans. Here are some options to consider:
1. Get a personal loan
Personal loans may take a little longer to obtain, but with today’s technology, you can have the cash in a matter of business days. Check out personal loan aggregator sites like Fiona or Monevo to compare loans for which you may be eligible.
Some personal loans will have a fairly high interest rate, especially if you don’t have a good credit rating. However, they will almost always have a better interest rate and better terms than a payday loan. And you can usually transfer money to your personal bank account within two to three business days.
Find the best personal loan for you
2. Look at the introductory APR credit cards
If you have decent credit and find yourself in dire financial straits, consider credit cards with a low introductory APR. These cards often come with a 0% introductory APR for the first few months of card possession. You can use this card to bill your emergency expenses and then reimburse them without having to pay interest.
Some of these cards are available for those with medium to high credit. So it’s worth considering even if you don’t have great credit.
Again, however, accessing this money can take a few days to a few weeks. So if you need the cash right away, consider one of the other options on the list. Then, if you qualify for a 0% introductory APR, you can transfer the outstanding debt onto it so you can pay it off without paying that much interest.
3. Get a cash advance by credit card
If you already have a credit card with available credit, consider getting a cash advance on your card. A cash advance will have a higher interest rate, often much higher, than your standard APR. And it will usually charge a fee of $ 5-10 to withdraw the money. However, it gives you quick access to cash with an interest rate that is probably even lower than what you will get with a payday loan.
And, again, if you then qualify for a card with a 0% introductory APR, you may want to consider transferring your balance to it to ultimately save on interest.
Related: Best credit cards with cash advance
4. Look at alternative payday loans
As payday loans have become more and more problematic, Alternative Payday Loans (PAL) have emerged. These loans are often available from credit unions and they allow you to borrow a small amount of money for a short period at a much lower interest rate than payday loans. If you are already a member of a credit union, find out if you can access a program like this.
Some companies also specialize in alternative payday loans for military personnel and their families, in particular. These businesses are often supported by nonprofits seeking to tackle the payday loan crisis in low income areas or around military bases.
Related: Apps That Lend You Money Now – Alternatives To Payday Loans
5. Get an advance on your salary
Finally, you can check with your employer if you can get a payday advance. You can often pay off payday advances over time, and you probably won’t have to pay a lot of interest, if any. If you qualify, a payday advance may be the ideal alternative to a payday loan.
The above options are available to everyone, military or not. But if you’re in the military, you might have access to a few even better options.
6. Examine military specific personal loans and SCRA benefits
Some military entities offer personal loans that are often available at a lower rate. For example, USAA offers personal loans specifically for active duty military personnel. The loans have flexible repayment terms and generally low APRs. And they don’t have an origination fee, which means the money you borrow is all you have to pay back. Credit unions in the military branch usually have similar offers.
Other traditional lenders also offer benefits to the Servicemembers Civil Relief Act (SCRA), which can cap interest rates on personal loans at 6%. This is much less than what you will find with payday loans! Many traditional lenders, including OneMain Financial, Capital One, and Discover, offer SCRA benefits to eligible service members.
However, the typical application process for these loans may not include SCRA information. If not, you should call the lender directly to find out how to get a low interest personal loan for an active duty military member. The savings will be well worth the extra phone call needed to get these benefits.
Again, keep in mind that the personal loan application process can take longer than getting a same day payday loan. One option here is to charge your emergency expenses to a credit card and then pay them off with the personal loan. Or if you absolutely must get a personal loan in an emergency, immediately apply for a personal loan to pay it off. You can then quickly break the cycle of short-term, high-interest borrowing.
7. Find out about military aid groups
Finally, each branch of the military has its own relief or aid group, and many of these entities offer quick alternatives to payday loans. Here’s what you can expect from each group:
- Army emergency relief – Military and immediate family members can apply for interest-free loans from Army Emergency Relief for emergency travel, health expenses, essential furniture, minor home repairs, appliance maintenance and other urgent expenses. There is no maximum amount for these loans and you can get help the same day you apply.
- Navy-Marine Corps Relief Society – This company offers a variety of relief and assistance options to members of the Navy and Marine Corps. But the fastest option is the Quick Assist Loan, which is an interest-free loan of up to $ 500 that must be repaid within 10 months.
- Air Force Aid Society – AFAS offers various emergency assistance options. Standard assistance may include a loan or grant in tandem with financial counseling and budget support for emergencies. Falcon Loans are accelerated interest-free loans of up to $ 1,000.
- Coast Guard Mutual Assistance – Coast Guard members can access a variety of financial aids, including financial counseling and adoption assistance. But if you are in an emergency, the quick loan program is probably the best option. It offers an interest-free loan of up to $ 1,000.
Alternative options for payday loans are available for everyone. And military personnel – active duty, retired and their families – have access to even more and better options than most people. If you need the cash fast, skip the payday loan store and try these alternatives instead.