About half of all Americans say they spend every bit of their paychecks on their living expenses.
If you live paycheck to paycheck, or if finances are just tight at the moment, you may be thinking about taking out a loan. You know there are all kinds of loan options available to you, but you’re especially curious about a PAL loan, or Payday Alternative Loan.
You’re not clear on what exactly differentiates them from payday loans no credit check. You have questions about your eligibility and the application process as a whole.
Above all, you just want to be certain you’re making smart decisions when it comes to your financial life.
This post is here to help. In it, we’ll explain the basics of payday alternative loans, what they’re used for, and more.
Read on to learn how a PAL loan can help you keep your head above water.
Define PAL: The Basics
Before we speak about PAL loans on a deeper level, let’s talk about what they are.
These loans are somewhat similar to traditional payday loans. However, they’re regulated by the National Credit Union Administration, a creation of the United States Congress.
If you’re currently a member of certain federal credit unions, you may be eligible for a PAL loan. These are different from traditional payday loans not just when it comes to who you’re borrowing the money from.
Unlike traditional personal loans no credit check, payday alternative loans give you more time to pay back the money. In other words, they offer you longer repayment periods. Additionally, they come with lower interest rates and, in most cases, lower overall fees than traditional payday loans.
This means that they make it much easier for you to avoid getting trapped in a vicious cycle of borrowing money you need, finding yourself unable to pay it off due to high interest rates and short payment cycles, and accruing more penalties and debt as a result.
Of course, as with traditional installment loans, payday alternative loans have a few specific terms and requirements.
Let’s take a deeper look at the terms you will likely encounter now.
Understanding Credit Unions
In most cases, you’ll need to have been a member of a credit union for a minimum of one month to get approved for a payday alternative loan.
Remember that a credit union is not a bank. Instead, it’s a kind of cooperative nonprofit that does perform many of the same functions that a bank does.
You can get loans, make deposits, and much more. However, the union is completely owned by its members-which means it exists to primarily serve your needs.
Because a credit union’s main goal isn’t to make a profit off of its members, it can offer you better bad credit loan rates.
So, how can you join a credit union?
The simplest way to become a member is through your employer. However, you have plenty of other options as well. You can join through your church, your school, or even just by getting in touch with a local credit union. It usually only costs you a deposit of about $5-$25 to join then you can start to use your account.
You can ask the specific credit union you’re interested in joining more about its unique eligibility requirements.
Other Common PAL Terms
There are a few other things you need to know about PAL loans before you make the decision to borrow.
In most cases, PAL loans, like traditional payday loans online, are best suited for those who only need to borrow a small amount of money. Usually, you’ll be able to borrow anywhere from $200 up to $1,000.
Again, the idea here is that you’re “tiding yourself over” from one paycheck to the next.
This means that payday alternative loans are not right for those who are looking to finance large purchases or pay down significant amounts of debt.
Additionally, you need to know that, even though they have a longer repayment period than payday loans, it’s still not especially lengthy.
Usually, you’ll need to be sure you can repay your loan in full after about six months. In the majority of cases, rollovers are not permitted.
There are also some limits on the number of PAL loans you can take out within a certain amount of time. Be aware you can’t take out multiple PAL loans at once. Furthermore, you can’t take out over three PAL loans within six months.
Again, if this sounds like it’s not enough money for you, you should look into other loan options. However, if you’re among the close to 80% of Americans that live paycheck-to-paycheck, it may still be a good option.
Interest Rates and PAL Loans
Finally, let’s talk about the interest rates you can expect to face when you apply for a PAL loan.
In general, the good news is that the majority of these loans carry interest rates that max out at around 28%.
Of course, this is why it’s so important for you to avoid borrowing more than you truly need. After all, there’s a major difference between 28% of $200 and 28% of $1,000.
Take a hard look at your expenses in relation to your household income before you apply for the loan. Look for things you can eliminate or at least cut back on for a few weeks.
You might also consider applying for a low-interest credit card, or just making the purchases you need to on credit if possible.
Alternatives to PAL Loans
Finally, understand that credit unions offer other kinds of loans in addition to payday alternative loans.
For example, you might be interested in applying for a personal loan from a credit union. These are designed to help you build up an emergency fund. You’ll get a portion of the loan up front and the rest once you finish paying it off.
You might also be interested in what’s known as a dedicated purpose loan. These are designed to help you to cover a single one-time expense. Many people use them to help pay for the cost of a citizenship application when they come to the United States, for example.
You could even look into a deferred access loan. This is especially useful for people who want to improve their overall credit scores. Especially if you want to apply for a larger loan in the future, you’ll need good credit to make it happen.
Your credit union will issue you the loan and then keep the payments from it in a savings account. You’ll only be able to access these funds once you’ve paid off the loan in full.
If You Have Bad Credit
So, you feel like a PAL loan is likely a good choice for you.
However, you are concerned about one thing in particular: your current credit score. It’s not exactly as strong as you’d like for it to be.
The good news is payday alternative loans are generally still accessible for people with bad credit. As we mentioned earlier, PAL loans are an excellent way for you to be able to improve your credit score.
Instead, lenders are much more focused on your current income level. After all, this will give them a good understanding of whether or not you’ll truly be able to afford to pay the loan back.
In some cases, you might be able to get a payday loan online with no credit check and be approved instantly for a PAL. This is good as every time someone checks your credit report it does take a slight hit.
However, it’s important for you to understand that not every credit union is able to qualify for PAL loans. Before you join one, make sure you’re absolutely certain that they do.
You should also ask about the application fee for the loan itself and the interest rates they offer. In most cases, the standard fee for a PAL loan will be somewhere around $15 for each $100 that you borrow within the loan.
Don’t be afraid to shop around-or even to negotiate if you can. You might find that credit unions are more willing to work with you than traditional banks and other lenders. Take advantage of that fact.
Application Requirements for PAL Loans
If you’re interested in a loan PAL, you’ll of course have to meet the application requirements. Each payday loan online same day cash will likely have its own unique set of requirements.
That said, there are a few standard requirements you should expect to encounter.
First of all, you’ll need to show you’re at least eighteen years of age when you apply for the loan. This means you’ll need to provide a current and valid form of identification issued by the government.
In some cases, you may also need to give the credit union your social security number.
You will also use your state identification to help you prove you live in the state in which you’re applying for the loan.
Earlier in this article, we spoke about how you can prove to the credit union that you’re capable of actually paying back the loan. You need to be able to show them your proof of income.
We know what you’re thinking: “what if I’m currently unemployed?” Don’t sweat it-you’re not out of the running just yet. If you can’t provide pay stubs or letters of employment, you can use past bank statements to prove that you still have some form of income coming in.
When in doubt, we suggest you apply for the loan and see what happens. You might be surprised by your ability to get approval for a payday alternative loan.
PAL Loans: Who They’re Right For
Before we close, let’s quickly review who PAL loans are likely the best option for.
If you need a bit longer of a repayment period than a traditional payday loan but can still pay off the no credit check loan within six months, they’re a wise choice.
The same goes if you’re wary of the higher interest rates associated with many traditional payday loans. Remember that you need to be willing and able to join a credit union in order to get a PAL loan.
Additionally, remember that PAL loans aren’t your best option if you need to borrow a fairly large amount of money. Don’t worry, however-you still have plenty of other lending options if you need a bigger sum.
Above all, be honest with yourself about what you’re planning to use the money to accomplish. Ask yourself if what you’re doing truly does require you to take on more debt.
If not, then consider cutting back on your expenses and living a bit more frugally for the time being.
Are You Ready to Apply for a PAL Loan?
We hope this post has helped you to better understand what a loan is and whether or not they’re a good solution for your current financial situation.
Remember to always check with each individual credit union before you apply to be certain that they actually offer payday alternative loans. Also, make sure you can afford the interest payments each month as well as any fees associated with the PAL loan.
Looking for additional advice about connecting with the right PAL lender? Want to apply for a traditional payday loan?
We’re here to help you with all of that and more.
Let us help you to get your finances back on track. Learn more about your lending options and take better control of your credit by checking out more of our blog.