You’ve probably heard about payday loans being illegal, or at least restricted, in Georgia. But what are the perks of getting short-term loans in this state? Even if you can’t use payday lenders to earn extra dollars, some loan alternatives will help you pay for emergencies. Sounds pretty convenient, right?

However, before going to the lender’s office, let’s figure out how the regulations of online payday loans in Georgia work and how to avoid their risks. This article will help you discover the kitchen of lending and borrowing a cash loan in Georgia, whatever your needs are.

Regulations of Payday Loans in Georgia

According to Payday Lending Act (OCGA § 16-17-1 et seq.) and usury law (OCGA 7-4-1 et seq.), payday loans in Atlanta and the whole of Georgia obey some rules and regulations. They are generally illegal, but there are some exceptions. If a payday lender is licensed by Georgia’s Department of Banking and Finance, they can provide a payday cash loan with many restrictions. 

For example, a licensed direct lender can’t charge more than 10% interest on a loan of $3,000 or less. The maximum term varies by lender, but usually, it ranges from 2 to 12 months. Plus, the maximum APR doesn’t exceed 16%. You aren’t allowed to have a rollover or extension for your repayment plan in Georgia. Plus, there is no cooling-off period, and default penalties are prohibited by law. 

Risks Associated with Payday Loans

The hard truth is that online payday loans have high-interest rates. This is the risk you must assume once you’re considering them. However, there is a reason: the funding is quick. That’s why payday lending comes with a high-interest rate.

Another risk is the debt trap. You take out a cash advance loan to pay for unexpected expenses but then struggle to pay it back. Once you do it, your monthly budget is suffering again. And before you know it, you’re stuck in this vicious cycle of borrowing with no end.

The following risk is about affecting your credit score. Having fewer outstanding payday loan amounts on your active checking account may be better. Although payday lenders don’t report your application requests to major credit bureaus and perform no credit checks, your late payments may affect your credit in the long term. Thus, online loans in Georgia don’t help you build your FICO score over time. They might require information about your employment and bank accounts to assess your creditworthiness.

Alternatives to Payday Loans

To avoid dealing with payday lenders but still need extra dollars in your bank account, check these Georgia payday loan alternatives. Good news: they are available even with poor credit scores.

Emergency Savings Funds

If you’re hit with unexpected costs and don’t have the cash to cover them, rely on your emergency savings. It’s like having your superhero with no interest in your back pocket. Set aside money each month into a separate savings account for emergencies. That way, when life throws you a curveball, you’ve got the cash to handle it without resorting to this dreaded payday loan.

Payday Alternatives Loans (PALs)

A payday alternative loan is cheaper and more flexible than a regular payday cash loan. Alternative lenders perform a soft credit check that won’t affect your credit score. Some federal credit unions provide them through a direct deposit within one business day.

Credit Union loans

A credit union is a traditional lending company that allows you to get the needed loan amount. They also offer lower interest rates (up to 10.24%) and more flexible repayment terms (up to 10 years). Plus, they’re all about serving their members and the local community of Georgia residents. If you are a loyal member, the company will give you a discount on the annual percentage rate. The loan amounts range from $500 to $50,000, which are funded through a direct deposit within several days.

Installment Loans

An installment loan is the opposite of those Georgia payday loans that drain your checking account. Installment loans are also regulated by the Georgia Department of Banking and Finance and Georgia’s Installment Loan Act (OCGA § 7-3-1 et seq.). With an installment loan, you borrow a fixed amount and pay it back in regular installments over a set loan term. The best part? The installment loan interest rates are usually lower (up to 35.99%), and you can plan your budget accordingly. The typical loan term may reach 24 months, and the maximum loan amount is $5,000, which you can spend on more significant expenses like home improvements, special events, or medical procedures.

Personal Loans

A personal loan is a long-term installment loan to cover credit card debt or other financial obligations like mortgages or car payments. Unlike a payday loan, the personal loan has a low APR that allows you to save money on interest. Georgia residents must have average credit scores to get cheaper personal loans. However, bad credit lenders that provide personal installment loans are also available in Georgia. So, depending on the personal loan type, you can get from $5,000 to $35,000 and repay it within 60 months or more. Remember that personal loans are long-term financial solutions, not an option to cover short-term expenses.

Credit Card Cash Advances

Consider a credit card cash advance if you’re in a pinch and need quick cash but want to avoid payday lenders. It’s like borrowing a loan from your credit card, but pay attention to the interest rates. They can be higher than your usual purchases, so tread carefully. The average credit card rate is 16% – 18%. However, it depends on your credit score. The better the credit, the cheaper the rates.

Assistance Programs and Community Resources

Local assistance programs and resources are often available to help people in challenging financial situations. These programs may offer financial counseling or emergency grants. Contact local nonprofits, churches, or social service organizations to see what options are available in your area. Remember, you’re not alone; some people genuinely want to help.

Seeking Financial Advice and Counseling

Professional guidance is crucial when you’re struggling with money lack. For example, a credit counselor or a financial expert will help you navigate the complexities of budgeting, investing, and planning for the future. As a result, you’ll improve your debt-to-income ratio and financial literacy and avoid dealing with payday lenders with high interest and additional fees.

Also, remember the benefits of financial education too. While seeking professional guidance is necessary, empowering yourself with knowledge is essential. Take the initiative to learn about personal finance and money management. Many resources are available, like books, online courses, and workshops. The more you know, the better equipped you’ll be to make informed decisions about your money. 

Now, finding a reputable financial counselor is critical. We recommend looking for certifications and credentials like Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA). These designations indicate that the person has undergone rigorous training and meets specific professional standards. Such an expert will be what you need at this point.

Conclusion

If you live in Georgia and need to borrow money, try the options mentioned above and see what fits your financial needs. Remember that getting a short-term loan in Georgia is generally illegal and challenging. You never know what lenders may be excepted from the payday lending law. However, if you can afford the monthly payments and overdraft fees, the alternatives of payday loans online are definitely for you.