The Best Payday Loan Alternatives of 2020

Sometimes you find yourself in a bad spot with a big bill hanging over your head. You need to scrape together some cash somehow to cover it, but where do you turn? Every year, 12 million Americans use payday loans to cover their cash flow conundrums. But payday loans just dig people deeper into the hole with an average APR near 400% — there are much better day loans out there. We’ve put together a list of the best payday loan alternatives ranked by our SimpleScore methodology that reviews rates, loan amounts, terms, support and fees to help you find a much better loan to deal with an emergency.

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      The 5 best payday loan alternatives of 2020

      Payday loan alternatives at a glance

      LenderAPRLoan AmountTermsSimpleScore
      RISE Credit50%–299%$500–$5,0005–26 months3
      Avant9.95%–35.99%$2,000–$35,00024–60 months4
      OneMain Financial18%–35.99%$1,500–$20,00024–60 months4.4
      Peerform5.99%–29.99%$4,000–$25,000Up to 3 years4.2
      OppLoans99%–199%$500–$4,0006–36 months2.8

      Best for Free Credit Score Checks – RISE Credit

      If you need a fast loan with bad credit, RISE Credit won’t let you down (unlike your interest rate when you make payments on time).

      APR Range
      50%–299%
      Term
      4–26 months
      Loan Amount
      $300–$5K
      SimpleScore
      2.5 / 5.0
      close
      SimpleScore RISE Credit 2.5
      Rates 1
      Loan Size 1
      Customer Satisfaction N/A
      Support 3
      Fees 5

      If you’re in a pinch and need cash fast, RISE Credit can get money into your bank account as soon as the next business day after you’re approved. While RISE’s rates are rather high, it’s still one of the top payday loan alternatives for people with bad credit. As you make on-time payments, you can earn a lower interest rate on your loan — a nice benefit if you’re working hard to pay off debt and build your financial footing. If your credit is average or better, though, you could probably find better rates and better terms from another lender when you need an emergency loan.

      Read our full Rise Credit review.

      Best for Large Loan Amounts – Avant

      Avant kicks payday loans to the curb with its interest rates as low as 9.95%.

      APR Range
      9.95%–35.99%
      Max. Loan
      $2K–$35K
      Term
      $2K–$35K
      SimpleScore
      3.2 / 5.0
      close
      SimpleScore Avant 3.2
      Rates 2
      Loan Size 5
      Customer Satisfaction 2
      Support 4
      Fees 3

      Do you need a large loan in a hurry? Avant Loans is one of the top online personal loan lenders, offering people up to $35,000 for emergency expenses. You’ll get your funds as soon as the next business day after you’re approved. Avant’s interest rate isn’t terrible for people with bad credit, especially compared to the average payday loan with its nearly 400% APR. You will have to watch out for Avant’s 4.75% administration fee, which will make your total balance even higher than what you actually borrow.

      Read our full Avant Loans review.

      Avant Disclosure

      The actual loan amount, term, and APR amount of loan that a customer qualifies for may vary based on credit determination and state law. Minimum loan amounts vary by state. Avant branded credit products are issued by WebBank, member FDIC.

      Best for Fast Funding – OneMain Financial

      Less-than-stellar credit won’t stop you from landing a stellar loan from OneMain Financial.

      APR Range
      18%–35.99%
      Max. Loan
      N/A
      Term
      2–5 years
      SimpleScore
      3.3 / 5.0
      close
      SimpleScore OneMain Financial 3.3
      Rates 2
      Loan Size 3
      Customer Satisfaction N/A
      Support 5
      Fees 3

      Looking for a lender with a personal touch? OneMain Financial looks at your full credit history — not just your credit score — to determine your eligibility. You can talk directly to a person to make sure you’re getting a truly personal offer for your loan when you need cash quickly. They’ll ask you a few questions and talk you through your options for either a secured or unsecured personal loan. While the interest rates certainly beat the best online payday loans, people with good credit can find a much better rate through other banks and credit unions.

      Read our full OneMain Financial review.

      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.

      Best Bad Credit Marketplace Lender – Peerform

      Peerform lets you skip the stuffy banks and the loan officers in suits to get a loan straight from another human being at a much better rate than any payday loan you’ll find.

      APR Range
      5.99%–29.99%
      Max. Loan
      N/A
      Term
      12–36 months
      SimpleScore
      3.8 / 5.0
      close
      SimpleScore Peerform 3.8
      Rates 5
      Loan Size 5
      Terms 3
      Support 5
      Fees 1

      Peerform gets you the money you need without having to deal with a traditional bank. This peer-to-peer lending platform matches people who need a personal loan with other people with money to lend. If you decide to go for a peer-to-peer loan with Peerform, you’ll see interest rates between 5.99% and 29.99% depending on your credit history, making it a solid option for people who need quick cash but are struggling to get a loan from a traditional bank.

      Read our full Peerform Personal Loans review.

      Best for Bad Credit – OppLoans

      If your credit score is down in the dumps, you can give it a boost in an emergency with a personal loan from OppLoans.

      APR Range
      99%–199%
      Max. Loan
      $4,000
      Term
      Up to 3 years
      SimpleScore
      2.8 / 5.0
      close
      SimpleScore OppLoans 2.8
      Rates 2
      Loan Size 1
      Terms 3
      Support 5
      Fees 3

      OppLoans offers simple, short-term loans to people with poor credit. If you struggle to get a loan from a traditional bank but need cash to cover an emergency bill, OppLoans can be a cheaper alternative to a payday loan. While its interest rates are high — between 59% and 199% APR — OppLoans still beats the rates for payday and title loans. You’ll also have between six and 36 months to pay your loan back, although you’ll rack up interest along the way.

      Read our full OppLoans Installment Loans review

      What is a payday loan alternative?

      Payday loans target people in tough times by charging exorbitant interest rates on short terms. Payday loan alternatives provide an escape from payday loans by offering lower interest rates, fixed payments and reasonable terms that give the borrower time to repay the loan without putting themselves in an even worse spot. These alternatives usually come as unsecured installment loans (meaning you don’t have to offer any of your property as collateral) from a bank, credit union or peer-to-peer lending platform.

      [Read: What Are Collateral Loans?]

      How payday loan alternatives work

      Personal loans are the payday loans best alternative. With online lending becoming more and more popular, you can apply for a loan and have it deposited directly into your bank account with ever leaving your house. 

      You’ll have to find a lender that matches your credit history — many traditional lenders won’t lend to people with bad credit — and follow its application instructions. While you may be in a hurry to get money for an emergency, you should still take some time to compare rates, terms and requirements from different lenders to make sure you get the best deal.

      APR

      Interest rates can vary widely across payday loan alternatives. The lender will determine your interest rate based on your credit history, the amount of time you’ll take to repay the loan and the loan amount.

      When you apply for a personal loan, you’ll notice that your APR is higher than the listed interest rate. The APR also accounts for any fees you might have to pay with your loan to give you a better idea of the true cost of borrowing that money.

      Read: Best Emergency Loans

      Borrowing with bad credit

      If you have bad credit, your loan application might get rejected from traditional lenders, but that doesn’t mean your only option is an expensive payday loan. You can still qualify for personal loans from a lender who specializes in loans for people with bad credit. These personal loans may come with higher interest rates than loans from a traditional lender, but they will still be significantly more manageable than a payday loan.

      Credit union PALs

      The National Credit Union Association created the Payday Alternative Loan (PAL) in 2010 to help people find financial relief at a lower interest rate than a payday loan. PALs can be between $200 and $1,000 with terms from one month to six months. You can receive up to three loans in a six-month period as long as the loans don’t overlap and you don’t roll over a balance into a new PAL. If you only need a small amount and know you can pay it back quickly, a PAL is a great option.

      [Read: How to Compare Banks and Credit Unions]

      How to qualify for a PAL 

      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.

      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.

      CardMatch™

      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.

      How to choose the best payday loan alternative for you

      1. Know how much you need to borrow. Interest adds up quickly, so only borrow what you need. Don’t guess or assume the amount. Factor in the total cost plus any fees you might have to pay upfront.
      2. Determine how much you can afford to pay each month. Your monthly payment amount will help you decide what term length you need, which can help you narrow down your choices of lenders.
      3. Understand your credit history. Lenders use your credit history to approve your application and determine your interest rate. If you have poor credit, you’ll want to adjust your expectations and look for a lender specializing in bad credit personal loans 
      4. Get pre-approved from multiple lenders. Most lenders offer pre-approval to show you the rates and terms you qualify for without hurting your credit score. Get pre-approved for several different lenders so you can compare your options.
      5. Compare rates, terms and fees. Remember, you have to look at the total cost of your loan as well as the terms and monthly payment amount. Choose the option that best fits what you need and can afford to repay.
      6. Choose a lender and apply. Once you make your decision, you can complete the online application. If you’re approved, many lenders will deposit the money in your bank account as soon as the next business day.

      [Read: Emergency Loans for the Unemployed]

      Payday loan alternative FAQs

      Lenders usually offer payday loan alternatives to people with low credit scores — usually from missed payments, loan defaults and other actions that put the lender at risk of losing money. The lenders charge higher interest rates to make sure they can still be profitable even if some risky borrowers don’t repay their loans.

      You should consider two factors when deciding between a personal loan and a PAL — the amount you need to borrow and how quickly you can pay it back. PALs are short term loans (six months or less) for amounts between $200 and $1,000. If you need anything more than that, you should go with a personal loan.

      You can look into other alternatives to payday loans if you aren’t comfortable taking out a personal loan. Credit cards can be great options for covering an emergency expense but may come with a higher interest rate and don’t give you the benefit of a fixed payment. You can also borrow money from family members or ask your employer for an advance on your paycheck to help you get out of a tough situation.

      Ask the Experts

      Brittany and Kelan Kline

      TheSavvyCouple

      Jeff Rose

      CFP® and CEO, Good Financial Cents

      Mark Nicholson

      Personal Money Network

      Michael Bonebright

      DealNews

      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.

      Methodology

      SimpleScore

      The SimpleScore is a proprietary scoring metric we use to objectively compare products and services at The Simple Dollar.

      For every review, our editorial team:

      • Identifies five measurable aspects to compare across each brand
      • Determines the rating criteria for each aspect score
      • Averages the five aspect scores to produce a single SimpleScore

      Here’s a breakdown of the five aspect scores and their rating criteria for our review of the best personal loans of 2020.

      Why do some brands have different SimpleScores on different pages?

      To ensure the SimpleScore is as helpful and accurate as possible, we developed unique criteria for every category we compare at The Simple Dollar. Since most brands offer a variety of financial solutions, their products and services will score differently depending on what we’re scoring on a given page.

      However, it’s also possible for the same product from the same brand to have multiple SimpleScores. For instance, if we compare NetCredit’s personal loans according to our criteria for the best personal loans, it scores a 2.3 out of 5. But when we compare NetCredit according to the criteria for the best bad credit personal loans, it scores considerably higher, since the criteria for the latter review are more lenient (lenders who serve borrowers with bad credit will always offer higher rates, so we needed to adjust our category methodology to account for different industry standards).

      Questions about our methodology?

      Email Hayley Armstrong at hayley@thesimpledollar.com.

      Rates

      We looked at the maximum APR for each lender — the lower their maximum rate, the higher their score.

      Loan Size

      We awarded higher scores to lenders with more generous loan sizes.

      Customer Satisfaction

      We leveraged the J.D. Power 2019 Personal Loan Satisfaction Study℠ to see how customers rated their experience with each lender. (If a lender wasn’t included in J.D. Power’s study, we skipped this aspect and averaged the four remaining aspect scores.)

      Support

      We awarded higher scores to lenders with the most channels for customer support.

      Fees

      We looked at the three most common fees — origination, late payment, and pre-payment — and penalized lenders for each fee charged.

      Trevor Wallis

      Contributing Writer

      Trevor Wallis is a St. Louis-based personal finance writer who teaches people how to achieve freedom through good money practices. He’s written for Bankrate, NextAdvisor, Rewards Credit Cards and Online Loans. When he isn’t writing, he’s roasting specialty coffee and planning new ways to use credit card rewards to explore the world with his wife and newborn son.