Are There Other Options for Same-Day Loans Besides Payday Loans?

Save money by shopping around for alternatives

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When a financial emergency strikes, you may need to borrow money—and fast. Payday loans may come to mind as a source of same-day funding, but they’re notoriously expensive. Fortunately, you have other options.

Several alternatives besides payday lenders provide same-day loans. For example, local banks and credit unions can deposit funds to your account in one day. Online lenders can also determine if you qualify instantly and deposit funds to your bank account within a few days. Additionally, you may be able to borrow from a credit card, pawnbrokers, title lenders, and people you know. 

What Is a Same-Day Loan?

Same-day loans promise to provide funds instantly, allowing you to pay expenses immediately. In some cases, you receive cash that you can spend immediately. Other lenders deposit funds to your bank account, and you can withdraw cash, pay bills from a checking account, or spend with a debit card. Same-day loans should not affect your credit score as long as you pay the funds back on time and in full.

Are Same-Day Promises for Real?

In some cases, yes. But some lenders may appeal to your sense of urgency in advertisements with no ability to follow through. The reality is that you can only obtain same-day funding from a limited number of sources, and you might need to visit in person. Some online lenders can fund your account in one day if you start early in the morning and all goes well. Still, it’s best to expect the process to take several days.

Some lenders may commit to instant approval decisions, but the funds could still arrive in your bank account several days after approval.

If you’re looking for same-day funding, consider whether you need:

  1. Cash (or a cashier’s check) in your hand that you can use immediately
  2. A deposit to your bank account that can satisfy debits or cover critical payments
  3. Assurance that you’re approved and money is on the way even if it takes a few days to hit your bank account (knowing that you’ve resolved the immediate issue may provide relief)

Banks and Credit Unions

Traditional banks and credit unions are an excellent source for same-day funding. These financial institutions don’t actively advertise speedy loans, but they may be able to meet your needs at a reasonable cost.

To receive funds immediately, it’s best to visit a branch in person. Doing so allows a loan officer to verify your identity, discuss your options, and complete an application without the back-and-forth of emails and phone calls.

Below are two of your options. 

  • Short-term loans: Some banks offer small, short-term loans designed to compete with payday loans. Pricing is straightforward and transparent, and you receive cash in your account instantly. For example, U.S. Bank offers a Simple Loan for up to $1,000. Borrowing costs $12 to $15 for every $100 you borrow, and you have three months to repay.
  • Payday Alternative Loans (PALs): If you belong to a credit union, you may be able to use a PAL for a short-term, small-dollar loan. PALs enable you to borrow between $200 and $1,000, and they tend to be less expensive than standard payday loans. With a six-month repayment period, your payments should be manageable.

Keep in mind that you may need to be a bank or credit union member with an active account for a minimum amount of time before you can receive same-day funding.

Online Lenders

When you borrow online, you often receive a decision within a few minutes, and funds arrive in your bank account within several days. If you primarily need an immediate resolution—but not necessarily cash in hand—those lenders may be an excellent option.

Online lenders like Prosper note that it takes one to three days for funds to arrive in your bank account. If you can live with that timeline, you might be able to save money by shopping among online lenders.

Apps like Earnin may also be able to help. You can cash out up to $100 per day from the app. There are no standard fees or interest—you simply pay what you think you should for the money you borrow. When it’s your payday, Earnin will deduct the amount you borrowed directly from your account.

Pros and Cons of Same-Day Loans

While same-day loans can help you get the money you need fast, they come with fees and interest charges which could cost you in the long run. It’s important to consider the pros and cons before moving forward with a same-day loan.

Pros
  • Get money instantly or within a few days

  • Various ways to secure funding

  • Potentially manageable repayment methods and periods

  • May not affect your credit

Cons
  • High fees and interest charges

  • Consequences for not paying back the funds

Other Ways to Get a Same-Day Loan

Credit Cards

If you have an active credit card, you can borrow instantly by using the card. The easiest and potentially least expensive option is probably to make purchases with the card, conserving cash in your bank account for other needs. Additionally, you may be able to take cash advances from your credit card. Look at your credit card terms to understand the fees and interest rates on cash advances before you take one, and make sure you’ll have the funds to pay off the card.

Pawnshop Loans

If you have valuables like jewelry or musical instruments, it may be possible to borrow from a pawnbroker. However, if you don’t repay the loan, you lose your belongings. That’s particularly tragic if you pawn something with sentimental value or if you receive less for your items than they’re worth. 

Pawnshops can charge a variety of fees. The Consumer Financial Protection Bureau (CFPB) has reported costs being as high as 240% annual percentage rate (APR) with pawnshops. You might do better if you just sell things you no longer need.

Payday-Loan Shops

Payday loans can provide instant cash, but you pay a price for speed. You might pay roughly 400% APR on the amount you borrow, making these loans unsustainable for long-term use. That said, payday-loan shops are usually relatively easy to find, and they might be a fast and easy option in an emergency. You typically repay within two to four weeks, although you might be able to extend the repayment time by paying additional fees.

Auto Title Loans

Title loans promise immediate cash when you use your vehicle as collateral. Like payday loans, title loans may have short repayment periods and relatively high costs. While there is usually no credit check required, the Federal Trade Commission (FTC) estimates that you could pay upwards of 300% to borrow against your title. Perhaps most important, if you don’t pay off your title loan, your lender can repossess your car.

If you rely on your vehicle to earn a living or get around safely, your financial problems (and other issues) could intensify if you lose your car, so a title loan may not be the right fit for you.

Friends and Family

Besides traditional lenders, online sources, and storefront shops, you might be able to borrow from people you know. Doing so could be awkward, so consider your options carefully before you even ask. To avoid problems, discuss everything in detail, such as:

  • Why you need the money
  • How you plan to repay it
  • What happens if you miss a payment or stop paying altogether
  • How much extra you will pay for the money (interest or fees, for example)
  • How you’d like your relationship to function during and after the loan
  • The fact that life may surprise everybody, possibly affecting your relationship

If you need money fast and don’t want to pay fees or interest, you might be able to raise cash quickly by selling things. In many cities, you can list items online on websites like Facebook Marketplace, Poshmark, Craigslist, and more. You might be able to find cash-paying buyers within just a few hours.

The Bottom Line

When you need money quickly, there may be numerous solutions available. Payday loans are just one option, and they are a relatively expensive one. Check with local banks and credit unions for same-day loans, and determine if online lenders can provide funds quickly enough to meet your needs.

Article Sources

  1. Alliant. "Personal Loans, Personalized for You." Accessed Dec. 17, 2019.

  2. Consumer Financial Protection Bureau. "I Heard That Taking Out a Payday Loan Can Help Rebuild My Credit or Improve My Credit Score. Is This True?" Accessed Dec. 17, 2019.

  3. LendUp. "Payday Loan - Same Day Loan Decision." Accessed Dec. 17, 2019.

  4. U.S. Bank. "U.S. Bank Simple Loan." Accessed Dec. 17, 2019.

  5. MyCreditUnion.gov. "Payday Loan Alternatives." Accessed Dec. 17, 2019.

  6. Prosper. "When Will I Receive My Funds?" Accessed Dec. 17, 2019.

  7. Earnin. "How Does the App Work?" Accessed Dec. 17, 2019.

  8. Experian. "How Do I Get Cash From My Credit Card?" Accessed Dec. 17, 2019.

  9. Consumer Financial Protection Bureau. "CFPB Takes Action Against B&B Pawnbrokers for Deceiving Consumers About Loan Costs." Accessed Dec. 17, 2019.

  10. Consumer Financial Protection Bureau. "What Is a Payday Loan?" Accessed Dec. 17, 2019.

  11. Consumer.gov. "Car Title Loans." Accessed Dec. 17, 2019.