If you need to borrow some quick money fast, you may be tempted to take out a payday loan or installment loan. A payday loan is a small, short-term, unsecured loan of usually $500 or less that you’ll usually receive with your next paycheck. An installment loan, on the other hand, is a loan that will be repaid over time with a series of scheduled payments, which are typically at least two payments that are made toward the loan.
But there is another option out there that you can try that is rather new. It’s called salary advance loan. This is an alternative offered by many banks and credit unions. It’s their chance to provide members with short-term cash options in an effort to help break the payday loan cycle that some get unfortunately trapped in.
Salary loans are small and short term. The most you may be able to borrow is $500, similar to a payday loan. The first step to qualifying is having direct deposit set up at your bank. This ensures easy collection of funds. Here are some of the terms and conditions:
- You may have to pay back by your next paycheck.
- If you can’t pay back in that amount of time, you need to break payments into smaller regular chunks.
- Regardless of which option you go for, you have to have it paid back within ninety days.
- The APR is based on your salary advance cash account balance, an account you’ll set up to qualify for this loan.
- For example, if you have less than $500 in your account, you might get a 13.5% interest charge. But if you have more than $500 in your account, you could qualify for a lower interest charge, like 7%.
- You have to already be a member at the credit union or bank that you’re trying to set up a salary advance loan through.
- Those who are participating need to be over 18 years old.
- Access to your salary advance loan cash account will be restricted, though the money in it and the interest accrued on the money in the account will belong to you.
Consider trying your local bank or credit union to see if they offer a product like this. It may be a much better option than payday loans. However, keep in mind that there are risks that come with taking out a salary advance, such as a higher chance of defaulting on credit card debt.