Banking

Payday Loan Alternatives from Credit Unions

EPF Last Update: April 12, 2020

You have bad credit, you don’t have high income, probably you already have existing payday loans, but you again don’t have enough money and you plan to get another payday loan.

If you are with bad credit, banks won’t approve your loan.

Some online lenders will approve you for a loan but rates will be expensive. Personal loans are capped at 35.99%. Alternative payday loans vary between 35.99% to 400%. Payday loans average at 400% APR, and you feel that these are your only one option.

Credit Unions are Your Next Great Option!

In this case there is one more option that you can try and it is credit unions. Millions of Americans benefit from them.

Credit unions approve people with bad credit. Credit unions pay more attention on your whole financial history, things like income, debt to income ratio, cash flow. They try to evaluate your actual ability to repay the loan, instead of relying mainly on your credit score.

Loans from credit unions are even cheaper than bank loans. They are capped at 18% APR, but according to many studies they average at 9% APR.

What are Credit Unions Payday Loan Alternatives?

For people who can’t get approved for a loan from credit unions, there is one more option that most of you don’t know. It’s called PAL or payday loan alternative.

To understand how PAL works and how they differ from payday loans and auto title loans, which we don’t recommend, please watch this full video.


As you can see they are actually a great alternative to payday loans and auto title loans.

Here is how we can define them in brief:

  • Loans between $200 – $1,000.
  • Repayment terms of 1 – 6 months.
  • Processing fees up to $20.
  • Lower interest rates of up to 28%.
  • Really bad credit can be approved.
  • No rollovers are allowed.

As you can see these loans beat many times payday loans. They are 10 times cheaper than payday loans. They are more flexible, and people with bad credit can be approved. Because PAL don’t allow rollovers and offer flexible repayment plan, the risk of debt cycle is low.

The only one disadvantage of PAL is that credit unions require that you have to be an active member for at least one month. Some credit unions would agree to lend you money but they will require that you become their active member from this day.

How Can I Find Payday Loans Alternatives from Credit Unions?

If you go to your credit union and go to its loan section, typically you will see: personal loans, auto loans, student loans, mortgage rates, and so on. What we at ElitePersonalFinance found is that many credit unions that have PAL don’t actually list them under their main loan sections. So the easiest way to find whether your credit union offer payday loan alternatives is to call and ask them.

Call them and ask them about all loan options that are available to you, not only about payday loan alternatives. many of you will find that they actually qualify for regular personal loans.

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