Car title loans, pawn shop loans, and payday loans are three of the most vicious debt traps for lower and lower-middle income Americans.
Payday loans often have interest rates in excess of 300% to 400% APR, and many working people end up spending half the year just trying to get out of debt. Car title loans may have lower interest rates (closer to 200%) but around 20% of title loan borrowers eventually get their car repossessed as a result of the loan (and plenty of people roll over the loan time and again).
But what alternatives are available for people with bad credit? OppLoans positions itself as a lower interest alternative to payday lending. And in reality, the lender offers better loan terms than most payday lenders (99% to 199% APR and terms up to 36 months).
See how OppLoans compares to the other top personal loan lenders and check out our OppLoans review below.
- Personal loan that is an alternative to payday loans
- 59% to 199% APR depending on a variety of factors
- Repayment terms up to 36 months
What OppLoans Offers
OppLoans offers high-interest-rate installment loans to people with less than perfect credit. It offers loans ranging from $500 to $5,000 though the actual loan sizes will vary by state. Interest rates range from 59% to 199%. The lender offers repayment terms up to 36 months long with payments structured on a daily, weekly, biweekly, or monthly basis.
These high-interest-rate loans may seem usurious, but OppLoans actually underwrites every one of its loans. It believes that its borrowers will pay the loan back. Additionally, OppLoans reports all payments to the credit bureaus. This means that borrowers can build credit when using OppLoans.
OppLoans funds its loans as soon as the next day which means the loan is about as good as a credit card cash advance or a payday loan in terms of getting you money when you need it.
How to Avoid High-Interest Debt
So should you take out a loan with 199% APR to make ends meet? The fact is, if you’re facing a decision where a nearly 200%-interest-rate loan is your only option, something needs to change fast. In all likelihood, you’re facing an extreme income shortage (job loss or having your hours cut) possibly coupled with debt or other fixed expenses.
Before you take out a 200% APR loan, consider the following options.
Pick Up a Gig
If you live in an urban area, you should be able to find options to earn money quickly. My favorite high-paying gig is being an umpire or ref for adult recreational leagues, but I’ve also found a few ways to get paid cash fast.
For example, babysitting or mowing lawns nearly always yields $20 to $100 in cash. Being a parking lot attendant during sporting events is also surprisingly pretty high-paying. Respond to ads on Craigslist or Facebook Marketplace, and set yourself up on sites like Care.com or Rover.com. You may be able to become a Lyft or Uber driver too.
Sell, Sell, Sell
Most of the time when you’re considering debt, you’ve already sold everything valuable that you own. But . . . in case you haven’t done this, sell whatever you can that isn’t helping you earn money. Even earning $50 from a “lot” of baby clothes can help you pay your rent.
Prioritize Your Bills
When money is really tight, it may be better to stop paying certain bills than to take out new debt.
Your first priority should be to pay for anything that helps you produce income or literally stay alive. That would include your health insurance, medicine, car expenses or bus pass, your Internet (if you work from home), and your cell phone (if you’re looking for work).
Next, paying for basic utilities (water and electricity) makes sense. In my experience, utility companies cut service really quickly whereas a landlord may take several weeks to kick you out after you haven’t paid, and a bank will take even longer to foreclose.
Call on Your Social Network
Very few people have friends or family that can or will float them a loan for a few thousand dollars. However, your friends and family may be able to pull together to help you in some other way.
Perhaps they can lend you business clothes for an interview, or they can give you some food out of their pantry. Maybe they can watch your kids for a few hours while you search for jobs. If you’re really facing a tough time, maybe you can move in with a friend or family member while you get back on your feet.
Other Types of Debt to Consider
It’s also worth saying that a loan from OppLoans is hopefully not your first line of defense. Here are a few other types of debt to consider before you take out a super-high interest loan.
0% Credit Cards
Put whatever you can on the credit card. Even if you have to pay a service charge, it’s worth it. The best time to take out a 0% credit card is before you need it. I try to have one on at all times even though I also have an emergency fund.
High-Interest Credit Cards — Especially from Discover
I learned this hack from the site Champagne and Capital Gains. Discover allows you to balance-transfer money from your credit card to your checking account. You will only pay the balance transfer interest rate on this transaction, not the cash advance interest rate.
Credit Cards with a Sign-Up Bonus
If you’re going to put most or all of your expense on a credit card, you can probably earn the sign-up bonus. This is especially great if your income situation resolves in a few months.
Credit cards may allow you to take out a cash advance for several hundred or even several thousand dollars. While the interest rate is higher than the standard credit card interest rate, it’s lower than the 59% to 199% you’ll pay at OppLoans.
Bank of Mom and Dad
I’m a huge advocate of trying to stand on your own two feet. But when you’ve tried everything possible to earn money, and you’ve exhausted other ways to borrow, it’s worth asking your parents or other family members to float you a loan, or to buy your groceries or your bus pass.
Should You Take Out a Loan from OppLoans?
Ideally, you should avoid taking out high-interest debt. Having multiple streams of income, savings, and great credit can help you avoid scenarios where you may have to consider 200% APR loans. Of course, if you’re considering a high-interest loan, life hasn’t gone according to plan.
When you borrow from OppLoans, you need to do it with a plan to pay it off. I wouldn’t recommend taking out a loan from OppLoans unless you can create and follow a legitimate plan that will help you raise your income while keeping your expenses extremely low.
OppLoans is a viable online alternative to other funding options, but it definitely should be a last resort. Check out OppLoans here >>
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Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.