The Best Payday Loan Alternatives of 2021 | The Simple Dollar

The Best Payday Loan Alternatives of 2021 | The Simple Dollar

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 2021

Payday loan alternatives at a glance

Lender APR Loan Amount Terms SimpleScore
RISE Credit 50%–299% $300–$5,000 5–26 months 3/5
Avant 9.95%–35.99% $2,000–$35,000 24–60 months 4/5
OneMain Financial 18%–35.99% $1,500–$20,000 24–60 months 4.4/5
Peerform 5.99%–29.99% $4,000–$25,000 Up to 3 years 4.2/5
OppLoans 99%–199% $500–$4,000 6–36 months 2.8/5

*Rates accurate as of January 2021.

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).


2.5 / 5.0

SimpleScore RISE Credit 2.5

Customer Satisfaction N/A

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%.

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.


3.3 / 5.0

SimpleScore OneMain Financial 3.3

Customer Satisfaction N/A

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.

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.

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 99% 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.


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.


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 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.

What to expect from a payday loan

Payday loans are very easy loans to get. As long as you’re at least 18 years old, a U.S. citizen and have a job and a bank account, then you’ll qualify for one of these loans with no problem. First you’ll fill out a short application and provide your bank account information. Once you’re approved, the lender will deposit the funds into your account. Often, the lender will require you to write a postdated check to the lender covering both the interest and principal. For example, if you get a payday loan for $500, then you might have to write a postdated check for $600. 

Once the due date for the loan comes, the lender will cash that check. If a borrower doesn’t have the money, then they might rollover the loan into a new payday loan or overdraw their account and face bank fees. 

Who should apply for a payday loan?

Anyone who is in an immediate financial bind can apply for a payday loan. These loans may be your only alternative if you have bad credit, because payday lenders don’t take your credit score into account when approving loan applications. Some of the reasons why you might take out a payday loan include:

  • Paying for emergency medical care
  • Paying rent or a utility bill
  • Making a car payment
  • Paying for health or car insurance
  • Paying off a traffic citation by the deadline
  • Paying for car repairs or maintenance

Payday loans usually have repayment terms of anywhere from two weeks to one month and exorbitantly high interest rates. Although payday loans can help to bridge the gap between paychecks, in many cases, the borrower is unable to repay the loan and must cover their loan by taking out another one, which only drags them deeper into debt. 

Payday loans during the COVID-19 pandemic

USA Today reports that over 20 million people have lost their jobs as a result of the COVID-19 pandemic, although about 18 million of those job losses are expected to be temporary. But while the unemployment numbers may recede once the virus has run its course, millions of workers presently have no real source of income. 

Because of this loss of income, it’s likely that people will turn to payday loans to make ends meet during the pandemic. However, that’s not the best idea. In fact, there are other government-sponsored financial relief options that you could pursue before taking out a payday loan.

[ Next: Do You Qualify for a Coronavirus Hardship Loan? ]

The government approved a $1 trillion stimulus package and extended unemployment benefits to millions of workers without jobs in spring 2020 as part of the CARES Act. 
But payday loan providers have had to lobby the government for a share of the financial aid that is going out to so many other types of businesses. The Small Business Administration has long held the stance that payday lenders do not qualify for small business loans, and the SBA is standing firm on this principle. Payday lenders are therefore suing the SBA in an effort to secure short-term loans like the ones that other types of small businesses are getting.

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

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.

We welcome your feedback on this article and would love to hear about your experience with the personal loans we recommend. Contact us at with comments or questions.

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