Payday loans in California: 4 alternatives

Woman drinking coffee and looking up payday loans in California Image: Woman drinking coffee and looking up payday loans in California

In a Nutshell

While payday loans are available in California, they’re an expensive form of credit. We’ve examined alternatives to payday loans in California that can provide cash in an emergency but may have lower interest rates and fees, give you the ability to build credit and offer other benefits you won’t get with a payday loan.

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If you live in California, taking out a payday loan is one way you may be able to get cash for short-term financial needs.

But keep in mind that payday loans in California are capped at $300 and come with high fees and short repayment terms. The average annual percentage rate is 372%, according to the California attorney general, and the maximum term for repayment is 31 days.

If you need cash fast, you don’t necessarily have to resort to high-interest loans from payday lenders. There are other options, including cash advance apps, payday alternative loans from federal credit unions, and personal loans from lenders that work with people who have less-than-perfect credit.

Here are our picks for best alternatives to payday loans in California to help you decide which one may be right for you.



Earnin: Good for small loan amounts

Why you may want to consider Earnin: Earnin is an app available to both Apple and Android users. Like a payday loan, it lets you borrow small amounts of money against your next paycheck. Payday advances start at $100 per pay period and may increase to up to $500 if you continue to use the app. When you use Earnin, the amount you borrow is automatically deducted from your checking account on your next payday.

  • No interest or fees — Unlike payday loans, which often charge exorbitant APRs, Earnin doesn’t charge fees or interest on the amount you borrow. Instead, Earnin asks people to provide optional “tips” when they get cash. But tipping is not a requirement to use the app.
  • Funding speed — With the app’s Lightning Speed feature, you can get your money the same day you request it, but this feature isn’t available everywhere. If your bank doesn’t support Lightning Speed, your funds will probably be deposited in your account in one to two business days. But keep in mind that there may be a delay between when the funds are deposited and when you can access them.
  • Eligibility requirements — To use the Earnin app, you must have a regular pay schedule — such as weekly, bi-weekly or monthly. More than 50% of your paycheck needs to be direct deposited into a single checking account each payday. And you must either work at the same location every day or use online timesheets to track your hours.
  • Earnings — After taxes and other deductions are withdrawn from your paycheck, you must earn at least $4 an hour. Keep in mind, when Earnin calculates your hourly rate, it only uses money directly deposited into the checking account you link to the app. Tips and commission you earn that aren’t sent to your checking account via direct deposit aren’t included in Earnin’s calculation.

Read our Earnin app review to learn more.

Read our Earnin app review to learn more.

NetCredit: Good for larger loan amounts

Why you may want to consider NetCredit: If you need a bigger loan, NetCredit offers online loans to California residents ranging from a minimum of $2,500 to a maximum loan amount of $10,500. NetCredit performs traditional credit checks during the application process, but it also says it considers factors beyond credit scores before making a loan decision. And the company offers financial education courses to help you improve your financial health if you’ve had credit difficulties in the past.

  • High rates — Because NetCredit works with people who have bad credit, its APRs are higher than what traditional personal loan lenders charge, but they’re still lower than what you’d typically pay with a payday lender.
  • Fees — NetCredit doesn’t charge application, origination or insufficient funds fees in California. And you won’t get hit with a prepayment penalty if you decide to pay off your loan early. But if you don’t make your payment within 15 days of the due date, you may be charged a late fee of $15.
  • Ability to apply for prequalification — You can check your eligibility for a loan with NetCredit without affecting your credit scores. If you qualify, you’ll receive an offer with your estimated rate and loan term options. If you accept the offer, NetCredit will do a hard credit inquiry, which may affect your scores. Just keep in mind that your offer terms can change after prequalification.
  • Build credit — NetCredit reports your payments to Experian and TransUnion — two of the three major credit bureaus — giving you an opportunity to build your credit with on-time payments.
Read our NetCredit personal loans review to learn more.

Klarna: Good for online purchases

Why you may want to consider Klarna: If you need to make an online purchase and you’re short on cash, you may be able to use the Klarna shopping app to buy what you need now and pay for it later. When you use the Klarna app to shop at participating online retailers, you’ll get access to exclusive deals and price drop notifications.

  • Three payment options — You can pay for your purchase in 30 days, in four interest-free payments every two weeks, or over a six- to 36-month period. If you want to finance your purchase, Klarna will check your credit. This will result in a hard inquiry, which can negatively affect your credit scores.
  • Account linking required — Before you make a purchase, you must link your bank account, debit or credit card to your Klarna account.
  • Interest charges — Klarna doesn’t charge interest on purchases when you pay in four installments, but the amount you owe will automatically be charged to your debit or credit card. If you link a credit card to your Klarna account and don’t pay your balance on time and in full, you could accrue interest charges from your credit card company. And if you use a debit card, you may pay insufficient funds fees if there’s not enough money in your account to cover your payment. When you use Klarna’s longest financing option, you will be charged interest — but you won’t find out what your rate is until right before you complete your purchase.
  • Fees — There’s no annual fee to use Klarna, and you won’t be charged a prepayment penalty if you want to repay the amount you owe before it’s due. But if you pay in four installments and Klarna is unable to collect one of your scheduled payments, Klarna will make a second attempt to collect your payment. If that attempt is unsuccessful, it may charge you a late fee of up to $7 and add your missed payment to the next scheduled payment. And if you finance your purchase, you could be on the hook for up to $35 in late fees.
Read our full Klarna review to learn more.

MoneyLion: Good for building credit

Why you may want to consider MoneyLion: MoneyLion is an app that offers small-dollar loans — up to a maximum amount of $1,000 — that give you a chance to build credit. When you get a credit-builder loan, MoneyLion reports your payments to the three major consumer credit bureaus each month. And you get weekly credit monitoring from TransUnion, so you can see how your payments are affecting your credit scores.

Depending on your finances, you may qualify to receive your full loan amount upfront. Or MoneyLion may give you a portion of the money right away and deposit the rest into an interest-bearing account, which you’ll receive when you pay off the loan.

  • Fees — To get a credit-builder loan through the MoneyLion app, you must have a Credit Builder Plus membership. The cost of the membership is $19.99 a month, but you can earn rewards to help cover the fee by logging into the app and using a MoneyLion® Visa debit card on purchases over $10.
  • No credit check — MoneyLion doesn’t review credit history to determine loan eligibility. The company looks at the activity in your primary checking account to decide whether to make you a loan offer.
  • Interest rate — The annual percentage rate on MoneyLion’s credit-builder loans varies from competitive to high, but even MoneyLion’s highest APR is lower than what you’re likely to pay on a payday loan. And you can repay your loan at any time without incurring a prepayment penalty.
Read our MoneyLion loan review to learn more.

How we picked alternatives to California payday loans

We reviewed more than a dozen alternatives to payday loans in California. To come up with our top picks, we checked interest rates, fees, eligibility requirements, loan amounts, and other benefits such as the ability to build credit and have access to financial education resources.


About the author: Jennifer Brozic is a freelance financial services writer with a bachelor’s degree in journalism from the University of Maryland and a master’s degree in communication management from Tow… Read more.