Two Alternatives to Direct Lender Payday Loans

Unlucky and unprepared is a bad financial combination. It’s like facing an unexpected medical bill or auto repair when you have no savings. 

If you don’t have the best credit, a payday loans direct lender is there to help. It offers a quick and convenient way to get the cash you need online, so you can take care of unexpected emergency expenses in time.

There’s just one thing holding you back from applying. Direct lender payday loans have a rap sheet for providing high-interest loans with incredibly short terms. If you aren’t prepared to repay what you borrow by your next payday, a payday loans direct lender may not be the right option for you.

So what other options do you have in an emergency? 

1. Installment Loans

In many ways, online installment loans direct lenders fill the same niche as their payday counterparts. They offer quick, convenient short term loans designed to help you with unexpected emergency expenses. 

For a detailed comparison of installment loans and payday loans, visit MoneyKey for more information. But for a quick rundown of their differences, you can look at their terms. 

Rather than having to repay everything back by your next payday, online installment loans direct lenders break your repayment down into multiple payments or installments. This means you may have weeks, months, or even years to pay back what you owe. 

2. Line of Credit Personal Loans

A line of credit is an open-ended financial product, which makes it different from payday or installment loans. 

For one thing, you’ll receive a credit limit from which you may withdraw at your discretion. Once you start tapping into this limit, you’ll receive a billing statement that outlines these three things:

  1. Your usage
  2. Finance charges and interest
  3. Amount due

Another difference is how you pay. In addition to your balance, you’ll see on your statement a minimum payment amount — a small flat fee or percentage of your amount owing. This is the least amount of money you must pay to keep the account in good standing.

If you decide to pay off your full balance, your line of credit won’t close. Instead, your full credit limit will be available to use again on repeat as long as you keep paying off your balance in full. 

How to Be Prepared for the Next Unexpected Expense

While borrowing money online is convenient, it doesn’t beat payingemergency bills upfront with your own money. Once you sort out how you’ll repay your installment loan or line of credit, it’s a good idea to think about how you’ll protect yourself from the next emergency.

1. Emergency Fund

Nothing beats a well-stocked emergency fund. You can tap into these savings any time a bill blindsides you. 

Experts say you should save three to six months’ worth of living expenses in this account, but don’t let this big goal intimidate you. Anything is better than nothing. 

2. Insurances

In big emergencies that come with even bigger bills, insurance can be helpful. While each of the following insurance policies come with monthly premiums, they may be less than the cost of a loan or the upfront cost of your disaster.

  • Medical: $448 a month for single coverage and $1,041 a month for a family
  • Pet: $585 a year for dogs and $350 for cats
  • Rental: $15 a month

Bottom Line

There are alternatives to direct lender payday loans, and they don’t all involve borrowing money. If you act fast to tweak your budget, you may free up cash to put towards savings and insurance that work just as well in an emergency.

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