Payday loan Alternatives that can lend you Short Term Cash with less APR

The first thing you think of when you face a financial emergency is to lend a payday loan. Not the first, in fact, it is the only resort most of us who are cash-strapped have. Before even knowing about the alternatives, we blindfolded assume that there won’t be any and go for a payday loan with a 390% APR or even more. The CFPB which issued few rules and regulations regarding the payday loans in the month of June after realizing that the borrowers are being led into the long term cyclic debt traps from which they are not able to get out.

The rules of the CFPB are like protective covers which include several another type of loans like high installment loans, auto title loans, short-term loans which charge as high as payday loans. According to the director of the CFPB, it is said that the lenders initially have to perform a credit check on the borrowers just like the banks whether they are capable of paying the loan back without any obstructions or financial obligations or without prolonging the period and then only lend the money to the particular borrower with a notified repayment period.

The question raised about the borrowers who get desperate for the cash because of the confrontations and who doesn’t have a decent credit score? The CFPB said that the borrowers who fail to meet the mandatory credit scores would be giving different alternatives like longer term less risky loans, short term loans with less APR or principal pay loan options. It also said that the lenders are not allowed to dip into the bank account of the borrower and cause a fuss but instead should intimate the borrower in written format about the unsuccessful repayment at least twice before triggering for the additional draft fees and other financial charges.

“Today’s proposal, along with past regulatory actions, will make it challenging for banks to meet the needs of the estimated 50 million consumers who access a variety of bank and nonbank small-dollar lending products each year,” said Virginia O’Neill, senior vice president of the American Bankers Association’s Center for Regulatory Compliance, in a statement.

However, a group of short-term lenders and payday loan lenders said that this role would be a blow to all the vendors and also the buyers. The consumers will not be able to get the loan and will again start suffering just like they would apply for a home equity or retirement for example. The solution to this is to pull your credit score step by step by taking small loans from credit unions and banks and returning them back to the pay period with competitive rates. Though this assumption is costly, it is recommended before you realize that you’re going into a vicious cycle.

Therefore, the people who see payday loan as the only opportunity to their dire situations should step back and study the situation before taking the decision of approaching the payday loan lender. Even if he/she did, they should calculate the APR and be careful to pay back within the given period.