The Covid-19 pandemic has reduced the income of a large number of people, making it difficult to keep up with the monthly expenses. This has pushed many to borrow money from banks and other lenders, and the most accessible type of loan that employees can get is a payday loan. These enable individuals to borrow money in a matter of minutes and use it however they see fit. Depending on the lender, the loan usually has to be repaid in a certain amount of time (usually 30 days). From a functional perspective, payday loans can be extremely useful, however, they have two big flaws.

First of all, payday loans come with high-interest rates that may add to the financial difficulties that an individual is going through. Secondly, using them too often can wreak havoc on your credit rating because lenders will conclude that you are dependent on the loans to get through the month.

This having been said, there are great alternatives to payday loans, provided that you know where to look and how to use them. Here are the best ones that are currently available:

1. P2P Lending Platforms

P2P lending platforms are websites that put lenders and borrowers in contact with one another. The platforms themselves only take a small commission and oversee the deals to ensure that all parties involved stick to the terms that they agreed upon. Borrowing small amounts of money through these platforms is not difficult and the loan is usually given in under one week, making it great for planned expenses such as rent or utility bills.

• Online Lending Services

Online lending services such as Cobra, work similarly to banks, however, they do not report their activity to any of the national credit registers, which means that borrowing money from them will not affect an individual’s credit rating. The downside with them is that they have relatively high-interest rates, making them useful only in case of an emergency.

• Lending Apps

Lending apps take borrowing money to a whole new level. Once an individual installs and registers on one of these apps, he can get micro-loans in a matter of minutes. In most cases, creating the account will only require proof of identity, proof of residence, and a bank statement in order to link the app to the user’s bank account.

• Local Credit Unions

Local credit unions are often created in small towns or are built around large workplaces such as factories. Their services are only offered to the individuals that share a common link to the people that are part of it. For example, if a credit union is started by the employees of a large company, they may choose to only give out loans to other employees from the same workplace.

• Lines of Credit

Most people do not think about the advantages of getting a line of credit, or a HELOC, when they are going through a period of financial instability, however, these forms of debt are much more useful and affordable than any type of loan. They give individuals access to large amounts of money, however, the borrowers only pay interest from what they withdraw from the account. This can make them great for individuals who need to pay the rent or their utility bills a few weeks before they get their salary.

Please keep in mind that using the 4 alternatives that have been included in this list will not have any effect on your credit rating. The loans will not be marked in your permanent financial files. However, not repaying them may lead to legal issues.