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Payday loan companies have popped up all over the country and the internet in recent years. While the idea of a cash advance on a future paycheck may seem like a good one, the fees, interest rates and rules that these companies use make it difficult for people to pay off the loan in one pay cycle. In many cases, a person who uses a payday loan ends up rolling the loan over time and again. Rolling the loans over from one month to another will result in a borrower paying an enourmous amount of fees by the time that the original loan amount is satisfied. Though payday loans can help those in a bad situation to obtain some much needed cash, there are a number of alternatives to payday loans that offer less cost and less risk to the borrower.

Personal Loans

Personal loans are the best alternative to payday loans. Personal loans have much lower interest rates and more favorable repayment terms. However, a person must have at least a decent credit score and average income to obtain a personal loan. Personal loans are available from most banks, credit unions and other financial institutions.

Creditor Negotiation

One of the most overlooked ways to deal with a pressing financial need is to seek assistance from the creditor. In many cases, creditors will allow a person to make a late payment, skip a payment or make some other arrangement. Simply calling a creditor and asking what options are available can help a person to gain the time needed to make a payment without the use of a payday lender.

Credit Card / Cash Advance

Credit cards typically have high interest rates when compared to a bank loan, but the rates on credit cards are far lower than the rates from a payday lender. Credit card cash advances can be used to make payments to creditors who accept cash only. In addition, credit cards have much better repayment terms than a payday lender.

Pawn Shops

Along with the proliferation of payday loan lenders, pawn shops have also become more common in many areas of the country. Pawn shops loan money against items of value that they hold in their possession. At the end of the loan term, generally 30 days, the borrower repays the loan, pays interest on the loan and regains their item. If they are unable to pay, they can either pay only the interest to extend the loan for another month or the pawn shop simply takes possession of the item. While pawn shops also charge high interest rates, they generally are not as high as payday lenders. In addition, the worst case scenario with a pawn loan is losing possession of the pawned item. Pawn shops also buy items outright. For those with items to sell, selling things to a pawn shop is a great way to obtain cash quickly.