Short term payday loans for bad credit

Alternatives to Risky Payday Loans

Payday loans seem like an easy fix when you need money fast. But their astronomical interest rates – often 400% APR or higher – can trap borrowers in an endless cycle of debt. Thankfully, there are safer lending options to bridge financial shortfalls. I’ve compiled this guide on ethical alternatives to predatory payday loans.

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Why You Should Avoid Payday Loans

Payday lenders market themselves as convenient solutions for temporary cash crunches between paychecks. However, their loans come with extremely high costs that often make repayment impossible:

• Exorbitant APRs: Payday loans typically carry 400%+ interest rates. For a 2-week $300 loan, you could owe over $350 in interest alone. This leads to…
• Debt spirals: The average payday loan borrower takes out 10 loans per year because they cannot afford repayment. Rollover fees accumulate into principal, burying borrowers.
• Aggressive collection tactics: When borrowers fall behind on unaffordable payments, payday lenders often harass them with calls, sue them, or threaten criminal charges.
• Fee-based pricing: Payday lenders earn the vast majority of revenue from fees rather than interest. This incentive structure motivates issuing loans designed to trap borrowers.

In summary, payday loans generate 90% of revenue from borrowers stuck in long-term debt spirals. They are predatory products that should be avoided if at all possible.

Ethical Short-Term Lending Alternatives

The good news? You have options beyond payday loans! Responsible lenders now offer loans tailored to short-term needs:

Oportun Personal Loans

Oportun issues personal installment loans from $300 to $10,000, even for borrowers with little or no credit history. They offer:

• Fixed monthly payments to help you budget
• Reporting to credit bureaus to help build your score
• No prepayment penalties – pay off early with no fees
• Personal customer service in English and Spanish

As a mission-driven Community Development Financial Institution (CDFI), Oportun caps APRs at 36% and works with borrowers facing financial hardship. This commitment to affordable lending has saved Oportun borrowers over $1.8 billion in interest and fees compared to alternative options.

Pros

• Fixed payments are predictable and affordable
• Can help build a credit history
• Responsive bilingual customer service

Cons

• High origination fees from $300 to $400
• Requires proof of income
• Not available in all states

Earnin Cash Advances

The Earnin app advances you money against your next paycheck. It works like this:

1. Connect Earnin to your bank account
2. Input your employer and work schedule
3. Cash-out up to $100 per day as an “advance” on your wages
4. Repayments are automatically deducted from your bank when your paycheck deposits

There are no interest charges or origination fees – you pay what you borrowed. Earnin operates on a “tip model” where you can pay a suggested tip of $9 or higher per Advance.

Pros

• 0% interest advances on your earned income
• Low regulatory limits reduce the risk of debt spirals
• No hard credit check

Cons

• Requires hourly employment schedule
• Repayment timing linked to the pay cycle
• Voluntary tips expected for service

By advancing earned wages you already worked for, Earnin helps cover gaps without adding debt at interest. For quick cash in a pinch, it’s a handy option.

Affirm Point-of-Sale Financing

Affirm lets you split large purchases like furniture or medical bills into fixed monthly payments. Their transparent process works in 4 steps:

1. Select Affirm when checking out at partner merchant sites like Walmart, Target, or Shopify.
2. Instantly see loan details like APR and payment schedule.
3. If the terms look good, confirm the financing.
4. Affirm deposits the loan amount directly with the merchant. You repay Affirm in predictable installments.

This smooth financing experience helps you budget big purchases without relying on credit cards.

Pros

• Zero hidden fees or surprises
• Fixed payment schedules
• Simple interest rather than compounding
• No prepayment penalties

Cons

• Requires 700+ credit score for 0% APR
• Not accepted everywhere like Visa or Mastercard
• Can only finance certain purchases

By turning a one-time expense into a repayment plan, point-of-sale financing gives flexibility on major purchases.

Personify Financial Personal Loans

Personify Financial funds personal loans from $1,000 to $15,000 for almost any purpose. They market to borrowers across all credit ranges, including those with poor credit.

While Personify interest rates do reach the triple digits, their largest share of loans charge 36% APR or lower. This lends greater affordability than payday products9. Personify also reports your payment activity to Equifax, Experian and TransUnion to help build a positive credit history.

Pros

• Fixed payments for predictability
• Can apply for joint spousal loans
• Help build a credit history

Cons

• Can charge high triple-digit APR
• Origination and admin fees
• Mixed borrower reviews

Even with high rates on some loans, Personify still beats payday lending in transparency. Their personal touch and credit-building opportunities remain useful alternatives.

Conclusion & Takeaways

When emergency expenses arise before payday, it pays to avoid desperate and expensive measures. Payday loans carry such excessive fees that escaping their debt traps proves unlikely. Thankfully, more ethical short-term lending options exist today.

Oportun, Earnin, Affirm, and Personify Financial present safer alternatives to bridge gaps during cash crunches or finance major purchases over time. Their fixed repayments, transparent terms, and focus on credit building provide workable solutions without confiscatory interest charges.

In this guide, we covered:

• The hidden risks of payday loans like 400%+ APRs and aggressive collections tactics
• Oportun’s fixed payment installment loans from $300 to $10,000
• Earnin’s innovative advances of your earned wages with 0% interest
• How point-of-sale financing from Affirm lets you budget big purchases
• Personify Financial personal loans from $1,000 to $15,000 across all credit types

While still forms of debt, these alternative lending options encourage repayment through predictable installments. Their lower and simpler fee structures help prevent dangerous debt spirals caused by payday loans.

Responsible short-term borrowing remains possible in times of hardship. Follow these guidelines to avoid financial quicksand and chart a stable path forward.

Frequently Asked Questions

Q: How fast can I get funds from an alternative lender?

A: Disbursement speeds vary between same-day and 5 business days depending on verification steps. Earnin advances wages fastest via instant transfers. Oportun and Personify confirm income/identity before approving loans in 1-2 days. Point-of-sale loans from Affirm payout once your order ships.

Q: What if I still struggle with repayments of alternative loan products?

A: Consider contacting your lender’s hardship program for options first. For example, Oportun offers emergency hardship assistance and payment rescheduling to help borrowers get back on track. If you remain unable to repay any debts, seek help from a nonprofit credit counseling agency to manage the situation.

Q: My credit score disqualifies me from low APR lending. What should I do?

A: All hope is not lost with a low credit score! Oportun approves applicants regardless of the score, offering the credit-building opportunity you need. Personify Financial also lends across credit types. With on-time repayments reported to bureaus, you can rebuild your score over time.

Q: Why are there such large differences in interest rates between lenders?

A: As non-bank lenders, alternative finance companies lack cheap deposit funding. They must raise investor capital to issue new loans. Companies perceived as risky pay a higher cost of borrowing that gets passed onto consumers as high APRs. More established fintech firms can access cheaper capital, enabling lower-rate loans.

I hope these answers help explain the pros, cons, and options among payday loan alternatives. Please feel free to reach out with any other questions.