The Best Payday Loan Alternatives of 2020

Chances are that if you’re searching for something like ‘best payday loans’ or ‘best online payday loans,’ you need some fast cash. Regardless of what your emergency need is, the uncertainty of failing to meet financial obligations can be scary. Before you head down the payday loan road, though, you may want to look into payday loan alternatives. Different options exist that may be less expensive and give you a better financial footing navigating your current situation.

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      What is a payday loan?

      Payday loans are short-term loans that carry high-interest rates and fees. The loans are given as an advance on a future paycheck. Generally, the full repayment of the loan is due after you receive your next paycheck. Many payday loan lenders force you to write a predated check or provide banking details to cover the payment on your due date.

      The problems with a payday loan are it can be extremely expensive, can be predatory and often are the start of a cycle of debt that is hard to break out of.

      Credit Cards

      A top payday loan alternative you should consider is credit cards. Not only are the interest rates and APR (the cost of borrowing) typically much lower, but there is added flexibility that can be helpful. If you take out a payday loan and don’t need the money, you still have to pay for it. With a credit card, you only get charged on the money you borrow.

      Also, if you need more money down the road, a payday loan will require you to apply for a second loan. With credit cards, the credit is revolving, meaning that you can use what you need up to your limit over and over again.


      Fast personal loans

      Another payday loan alternative option to consider is fast personal loans. Much like credit cards, these unsecured forms of lending require no collateral and can be significantly less expensive than payday loans. Many of the top lenders have processes set up to get money direct deposited into your account the same day or the next business day.

      Also, personal loans generally give you much longer terms to pay back your loan, whereas payday loans are typically due in a few weeks. Approval for personal loans may be a bit stricter than with payday loans, but many companies are still willing to work with those customers with less-than-great credit.

      LenderAPRMin. LoanMax. LoanTermsTime to Funding
      OneMain Financial18.00% – 35.99%$1,500$20,00024 – 60 monthsSame day
      LightStream5.95% – 20.49%$5,000$100,00024 – 84 monthsSame day
      Rise Credit50% – 299%$300$5,0004 – 26 monthsNext day

      OneMain Financial

      OneMain loans are potentially a quick source for cash, especially if you have less-than-perfect credit. Borrowers typically use these loans for personal expenses, such as home improvement costs, weddings, and debt consolidation, as well as for auto loans.

      Fixed APR
      Max. Loan
      2–5 years
      3.3 / 5.0
      SimpleScore OneMain Financial 3.3
      Rates 2
      Loan Size 3
      Customer Satisfaction N/A
      Support 5
      Fees 3

      Loans are available through OneMain Financial up to $20,000 with same-day funding. While smaller loans through the company can be unsecured, larger-sized loans may require an auto title as collateral. For people that do qualify for an unsecured loan, you will generally have a much higher APR. Exact rates and limits are heavily dependent on your resident state, credit profile and borrowing needs.

      OneMain Financial Disclosure

      Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum APR is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes.

      Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

      Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.


      With a promise to beat competitor rates and a fast and easy online approval process, LightStream personal loans are very attractive.

      Fixed APR
      Max. Loan
      24–84 months
      4.8 / 5.0
      SimpleScore LightStream 4.8
      Rates 5
      Loan Size 5
      Customer Satisfaction 4
      Support 5
      Fees 5

      Fast personal loans through LightStream start at the $5,000 mark and can go up to $100,000. These unsecured loans can be used for a wide variety of reasons, which may affect the rate that you are charged. If you’re set on using LightStream as a payday loan alternative but find a better rate elsewhere, the company’s Rate Beat Program will pay you $100 and beat the rate you found.

      LightStream Disclosure

      Disclaimer: Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay may be higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.

      Payment example: Monthly payments for a $10,000 loan at 4.99% APR with a term of 3 years would result in 36 monthly payments of $299.66

      © 2020 Truist Financial Corporation. SunTrust, Truist, LightStream, the LightStream logo, and the SunTrust logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.

      RISE Credit

      If you’re someone with bad credit that’s struggling to find a payday loan alternative, RISE Credit by Elevate may be of help. The money through RISE is expensive, spanning from 50% to 299% APR. Additionally, the maximum loan size is much smaller than some of the other mentioned alternatives. But, repayment terms through the company are from 4 months to 26 months, which may be more desirable than the shorter few weeks you see on most payday loans. Not all states have this term flexibility, though.

      Payday Alternative Loans

      A better option than a traditional payday loan is a payday alternative loan (PAL). This loan is available through the chartered National Credit Union Association and is backed by the U.S. federal government. Loans are available up to $2,000 with repayment terms of one month to 12 months. During every six months, you can get three PAL loans, but the loans cannot overlap or be rolled over. In other words, one loan at a time to help prevent an unhealthy debt cycle. Besides, the max APR on these loans is 28% — much lower than a traditional payday loan.

      How to qualify for a payday alternative loan

      There are two types of PAL loans you can apply for — PAL I and PAL II. To qualify for PAL I, you need to join a qualified credit union for at least a month. For PAL II, these restrictions are waived. Contact a credit union that offers PAL loans to begin the application process. The maximum application fee is $20.

      Payday loan alternatives to avoid

      Cash advances

      Those people with credit cards do have the option of getting a cash advance. The credit card runs the advance through as a unique charge with an additional fee. It allows the user to get cash immediately, but at a much more expensive rate. Typically, you’ll pay a fee for the cash advance and then also pay interest on the amount borrowed.

      If you have to get a cash advance, realize this will most likely be the most expensive form of borrowing, and, therefore, should be paid off first.

      Auto title loans

      You may be tempted to take an auto title loan as the rates will be better and approval easier. The problem, though, is that if you default on this loan, the lender can take your car. For many, this would create even more financial problems as they would lose their ability to get to work, the store and take the kids to school. An auto title loan should be avoided due to the risk it can pose to your means of transportation.

      If you have no choice but to take out an auto title loan, be aware of the risks you are taking. If you default on the loan, you will lose your car. Make sure you have a repayment schedule ready to protect your transportation asset.

      Ask the Experts

      Brittany and Kelan Kline


      Jeff Rose

      CFP® and CEO, Good Financial Cents

      Mark Nicholson

      Personal Money Network

      Michael Bonebright


      Why do people take out payday loans despite their high APR rates?

      People take advantage of payday loans for many reasons. The two biggest reasons are the simplicity and speed in which cash can be accessed. Many times payday loans are designed for individuals with little or no access to conventional credit. Though the loans are advertised as helpful for unexpected emergencies, seven out of 10 borrowers use them for regular expenses such as rent and utilities.

      Payday lenders rely heavily on repeat customers. Oftentimes these borrowers are low-income minorities that are charged outrageous compounding interest for cash advances. The lenders rarely, if ever, offer borrowers workable repayment plans, and in many states, operate with little to no regulations.

      What advice do you have for people struggling with their financial situation and considering a payday loan?

      First and foremost, you should avoid payday loans as much as possible. They are not a good solution when you’re struggling financially and often make things worse. If you’re living paycheck to paycheck and stressed about money, you need to take a step back and set up a financial plan. Budgeting your money will give you peace of mind and allow you to start making your money work for you instead of the other way around.

      The most important thing to focus on when money gets tight is your four walls of survival. These include your housing, utilities, food, and transportation —the bare minimum you need to survive. Everything else should be cut drastically while you build a good financial foundation.

      What do you think is the best alternative to a payday loan?

      Payday loans are a last-ditch effort, and even if you do find yourself leaning towards payday loans, you should try every other alternative first. Some of these alternatives include:

      – Reaching out to family
      – Negotiating lower bills
      – Your savings account
      – A personal loan from your credit union
      – Credit cards

      Editorial Note: Compensation does not influence our recommendations. However, we may earn a commission on sales from the companies featured in this post. To view a list of partners, click here. Opinions expressed here are the author’s alone, and have not been reviewed, approved or otherwise endorsed by our advertisers. Reasonable efforts are made to present accurate info, however all information is presented without warranty. Consult our advertiser’s page for terms & conditions.

      Jason Lee

      Contributing Writer

      Jason Lee is a U.S.-based freelance writer with a passion for writing about dating, banking, tech, personal growth, food and personal finance. As a business owner, relationship strategist, and officer in the U.S. military, Jason enjoys sharing his unique knowledge base and skill sets with the rest of the world. Follow Jason on Facebook here