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Tyler MunroMarch 15, 202313 min read

7 alternatives to payday loans that don't need a credit check

First off, big props 👊

You're here because you refuse to let payday lenders play you.

Maybe you typed "payday loans no credit check" into Google Search. Maybe you've already experienced the pain of taking out a payday loan. Maybe you've got no credit history and you're in need of a bad credit loan. Or maybe you're just facing a difficult financial situation, and you need help fast.

It doesn't matter how you got here. All that matters is that you're here now. And we're here to help.

So, take a deep breath.

Now let it out.

You've got this.

We've got this.

It's true, coping with a cash flow shortfall is no joke. It's one of the most stressful situations to be in. You've got bills to pay but no money to put down. And you might have bad credit or no credit score, making it that much harder to get cash fast. It feels like time is running out.

So, before you pull the trigger on payday loans, bad credit loans, title loans or any of the other high-interest loan providers out there looking to take advantage of you, please read this entire article.

Seriously.

We're going to hook you up with some alternatives to payday loans that don't need a credit check and that won't cost you in the long run.

But first, let's unpack what payday loans are and some of their big drawbacks.

What are payday loans?

To put it bluntly, payday loans are a massive scam.

☝️ Speaking of massive scams ☝️

No, but seriously.

At the time of writing, payday lenders do not operate in 18 states as well as Washington, D.C.

Why? you ask.

Because they're illegal.

And why are they illegal?

Because they take advantage of people who are already struggling with their finances.

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Payday loans are short-term, very-high-interest loans offered to consumers with almost no strings attached.

You might also know them as cash advance loans, check advance loans or bad credit loans. The reason we call these vile and usurious financial products "payday loans" is because they're typically based on a portion of your pay. To apply for a payday loan, you need to provide a pay stub, a piece of photo identification and your bank account information.

And that's about it.

Yep, you read correctly. Payday lenders don't care about your credit history or credit score and they don't conduct credit checks. In other words, even if you have a bad credit score, you can still get a payday loan. In many cases, with instant approval.

That's why there are almost twice as many payday loan shops in the U.S. as there are McDonald's franchises.

To make matters worse, payday lenders have gone digital, so now it's easier than ever to take out a payday loan online. In fact, you've probably already seen some of their ads:

"Best payday loans, zero upfront fees."

"Payday loans no credit check, low monthly payments."

"Payday loans online, low credit and no credit."

"Instant approval payday loans, no hidden fees."

"Same day payday loans, poor credit scores."

Blah, blah, blah.

Sounds too good to be true, right?

I'm here to remind you that if something sounds too good to be true, then it probably is.

The drawbacks of payday loans

Now that we've unpacked what payday loans are all about, let's talk cons.

Payday lenders charge high interest rates

One of the biggest cons that we glossed over is interest rates.

Yes, payday loans have high interest rates.

Like, really, really high interest rates.

Usually lenders will charge you between $15 - $20 for every $100 you borrow. If we calculate that on an annual percentage rate (APR) basis, which is what we use for credit cards, we're looking at between 400% - 600%.

Yikes.

For reference, the APR for a credit card is about 23%.

See what I mean? If there's one thing to remember about payday loans, it's those jaw-dropping interest rates.

Payday lenders charge hidden fees

For example...

Some payday lenders will want access to your bank account.

They claim it's to save you the time and energy of writing a post-dated check.

When it comes to repayment, they'll make a withdrawal from your bank account and if you don't have the funds, your bank will hit you with an overdraft fee.

This might not sound like a big deal, but at $35 a pop, these fees add up.

And, frankly, they're just not worth it.

Payday lenders are sleazy

It's easy to forget, but payday lenders are also debt collectors. And they can be ruthless.

If you fail to get roll-over from your payday lender and are late on your payments, expect phone calls at all hours, day and night.

Some will even call your place of work, family or friends. Talk about embarrassing.

They'll attempt to make bulk or incremental withdrawals from your bank account.

You might get letters from their law firm.

Anything to get repayment.

Needless to say, all of this could lead to major credit problems in your future.

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Why you need to find alternatives to payday loans

While most payday loans will hook you up with money fast (even with a low credit score), the long-term costs are too big.

Look at it this way, let's say you sign a payday loan agreement and borrow $500. I've chosen this number specifically because it's the average loan request people make.

The typical repayment period is two weeks. In other words, you have two weeks to pay back your loan and any accrued interest, or about $75 - $100, for a total of $575 - $600.

Now, if you can't make your payment, then you need to ask your lender for what's called a rollover. These are all structured differently.

That said, you'd typically have to pay off outstanding fees (so, from our example above, that would be the $75 - $100 interest), then pay both the principal amount with any additional fees.

This is how payday loans can push you even deeper into the debt cycle.

The payday loan debt cycle

Want to see a magic trick?

Here's how you turn $500 of debt into $700 of debt in just one month.

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  1. Take out a two-week payday loan of $500, with a $20 fee for every $100 borrowed
  2. Miss your payment and pay a rollover fee of $100 (paying outstanding fees for the $500 borrowed)
  3. Pay off your loan on week four ($500 + additional $100 in fees)
  4. In just one month, you've paid $700 to borrow $500...

And we call that a ripoff.

In all honesty, though, it's easy to see how so many people get trapped trying to payback their payday loans.

And just in case you aren't convinced yet, here are some sobering payday loan statistics:

  • 20% of borrowers default on payday loans

  • Over 50% of borrowers who took out installment loans from an online direct lender defaulted on their balance

  • 80% of borrowers tracked over 10 months re-borrowed or rolled over payday loans within 30 days

That's why you need an alternative.

And that's what I'm here to hook you up with.

So next time you see an ad online, on TV or in real like, advertising: "payday loans no credit check," I want you to flash it the middle finger, because guess what?

You don't need it.

Our 6 alternatives to payday loans that don't need a credit check

Okay, so here they are.

A list of options to get cash fast that aren't payday loans and that don't need a credit check.

1) Credit unions

If you aren't a member of a credit union, you might want to consider joining one.

If you already are a member, then this might be the option for you.

While credit unions do consider your income and credit score on a loan application, they also take into consideration your history as a member. So, if you're in good standing, you might qualify for a loan, even if you have bad credit scores.

Some credit unions offer payday alternative loans in the neighborhood of $1000 - $2000. Typically, interest rates will max out at around 28% and you'll have a year to pay them back in full. Just make sure that you aren't late for any payments, as credit unions will report them to the major credit bureaus.

On the flip side, they'll also report when you make payments on time, which can help you establish credit history and improve your credit score.

2) Community development financial institutions (CDFIs)

CDFI's are privately held financial institutions that typically serve less affluent communities. Many offer small-dollar loan programs, which are short-term, low-cost loans made for less than $2,500. Money is typically borrowed in increments of $100 and fees are minimal—like a 5$ flat fee for the entire loan, a small fixed percentage rate, or a basic pricing fee, say $10 for every $100 borrowed. Small-dollar loans have a maximum APR of 36%. So, peanuts compared to payday loans.

While many small-dollar loans require a credit check, some don't. Other documentation you'll need: proof you are 18 or older, an active checking account, a positive account balance with regular deposits and proof of income. Finally, you can't apply for a small dollar loan if you currently have one open.

3) Peer-to-peer lending

Peer-to-peer lending has been around for a while.

Basically, instead of borrowing from an institution, it enables you to borrow from another person. There are plenty of platforms out there.

For example, Upstart lets you take out online loans of $1,000 - $50,000 at an APR of 6.5% - 35.99%. Those with bad credit or who don't have a credit score can also use the service and many others like it.

If you do decide to look into peer-to-peer lending, definitely shop around and keep your eyes peeled for early payoff penalties, terms, origination fees, late fees and APR.

4) Personal loans from family or friends

When you're in a bind, sometimes the best thing to do is turn to friends and family.

I know, I know.

Nobody likes having to ask for money. But here's the thing, sometimes you don't have a choice. And besides, it beats falling into a debt spiral and potentially having to ask loved ones for even more money further down the road.

Look at it this way. If you were flush with cash and a close friend or family member asked you for help, would you give it to them?

Probably.

Because that's what family and friends are for.

On the plus side, personal loans generally come with low to no interest. They also usually don't include late payments. And you also don't need to worry about having a credit report.

5) Salary advance

This option is another no-brainer.

If you're struggling with cash flow and eyeing bad credit loans that could burn you in the long run, consider talking to your payroll manager. They might be able to advance your next paycheck or a portion of it to help you cover near-term expenses.

Employers are not legally allowed to profit from payroll advances, so asking for a salary advance is not the same as a loan request. That said, they can charge a small fee or interest rate to cover accounting. Some might need you to provide a reason for taking out an advance, while others might not. Whatever the case, it's always a good idea to get clarity on the terms before proceeding.

6) Earned Wage Access (EWA)

Many businesses today are empowering employees with instant access to their earned wages, so they don't have to wait around for payday. These so-called cash advance apps can make cash flow issues a thing of the past.

The best part, because it's your money:

  • you get it instantly, so even faster than same day loans

  • you don't have to worry about credit scores, credit checks, credit reports, or the three major credit bureaus (or any credit bureaus, for that matter)

  • you don't have to make any monthly payments

  • you don't have to deal with direct lenders

That said, cash advance apps typically charge a transaction fee—at most, $5 a pop. Some also offer free payout options, either through cards or perks.

7) Installment loans

Believe it or not but you may qualify for installment loans, even if you have bad credit. Bad credit borrowers will likely have to pay higher interest rates, though. So, there's that.

Simply put, installment loans allow you to instantly borrow money for an item you're purchasing. To pay off the loan, you make regularly scheduled payments, or installments, every week, month or year. Most loans include interest, but not always. Once you've paid back your loan in full, the account is closed.

Now, let's unpack the most common types of installment loans that might be available to you and when you'd use them.

Auto loans

As I'm sure you already guessed, auto loans can help you purchase a car. We call these types of installment loans secured loans, because they're secured by the car you'll be purchasing. In other words, the car functions as collateral, assuming you can't pay back the loan. Typically, these loans have fixed interest rates with a repayment period of up to seven years.

Mortgages

The most common mortgages are repaid over 15 to 30 years. Like auto loans, they are secured. It's also worth noting that to take out any loan amount, you'll need a good credit score.

Student loans

Unlike the other two loans mentioned above, student loans are unsecured loans. Usually, you don't have to worry about paying them back until after you've graduated college and found yourself a job.

Personal loans

Most personal loans are unsecured loans, though you can put up your house or car as collateral. They can be used for a number of different reasons, like making home or car payments, consolidating outstanding debt, or paying off unanticipated bills.

Keep in mind, all loans mentioned above can impact your credit score. First off, applying for one of them might trigger a hard credit inquiry. Then, there's repayment. Making late payments or failing to make payments altogether will affect your credit. The opposite also holds true.

"Payday loans no credit check?" No thank you!

Hopefully we've convinced you to steer clear of direct lenders who offer title loans, online payday loans, instant approval payday loans, and any of the other financial products that take advantage of bad credit (and no credit) borrowers.

Despite what you might think, you have options. While a bank loan might not make sense for you now, there are other direct lenders worth considering. For example, friends and family or your employers, as noted above. The point is, you don't have to make a difficult situation worse by turning to payday loans online or IRL.

If your employer doesn't currently offer Earned Wage Access and it's a service you'd like to use, please put them in touch. We partner with all major payroll processors, making it easy for thousands of companies like yours to provide on-demand pay and eliminating the need for payday loans.

Looking for some easy ways to score a quick buck? Check out our list of simple side hustles. They'll put money in your wallet without adding stress to your life. And for those who want to become more financially fit, don't miss these top three pieces of wealth wisdom from the guru himself.

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Tyler Munro

Tyler Munro is the director of brand and content at ZayZoon. He has previously led content marketing teams at OneTrust, Flybits and integrate.ai. In his spare time, Tyler writes literary fiction. His work has appeared in Yemassee Review and decomP, among others. He's also been nominated for the Pushcart Prize.

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