What Are Other Options To Payday Loans?

Payday loans are widely used yet can be too expensive as a way to borrow urgent money. In fact, people who find it difficult to get credit from others are the ones who resort to taking out payday loans. So, if you are in need to credit, you may try to check some other options rather than considering a payday loan.

What Are The Other Options or Alternatives to Payday Loans?

Before taking out a payday loan, you might consider your local credit union, sell any unwanted items, cut back on your expenses, or lend some money to family or close friends, or seek for debt advice.

  • Credit Unions

Credit unions are non-profit organizations that offer loans, savings, and current accounts for affiliates’ benefit.

The members’ payments are used to save or to lend money when needed. The purpose is to assist people to gain control over their finance. The idea is to save what they can and borrow what they can pay.

It can also be an alternative when you need to take the credit if you’re probable to be rejected by the credit elsewhere. Normally, credit unions give small loans amounting to £50 to £3,000. For more details, you can call 0800 015 3060. You can also check your local credit union on the Association of British Credit Union’s website.

  • Bank Overdrafts

Instead of taking a payday loan, you can try asking your bank for a small bank overdraft. You’ll be imposed charges on the amount you’ve acquired until it’s compensated. There may be an administration cost, an arrangement charge, and fees each month that you need to settle. An overdraft can also be removed, so if you have an overdraft you mustn’t exceed the limit and make sure to repay it on time.

  • Salary Advances

Some companies offer salary advances to their employees. So instead of taking payday loans, you might prefer getting salary advances as an alternative. Moreover, salary advances can be repaid at a rate that you can agree with. Though there may be certain costs in utilizing the service, it is possible to get advances without interest charges.

These types of loans serve as an option for welfare initiatives. Businesses can inform employees if they’re offering one of these options and if you’re qualified.

For other options of borrowing, it’s essential to acknowledge if a salary advance is the best choice for you. Companies should also analyze if a salary advance will benefit the employee and would not make their situation worst. Also, if you’re constantly tight with your budget, borrowing regularly won’t help.

  • Budgeting Loans

If you’ve been on working age benefits for at least 26 weeks you may be able to get a budgeting loan to pay for essentials like rent, furniture or clothes. The smallest amount you can borrow is £100 and normally you’ll have two years to repay it.

The money is paid straight into your bank account and is interest free. How much you get depends on your circumstances.

Should I Consider A Payday Loan

You should not consider taking a payday loan just for unessential expenses. As much as possible you have to try the other options available for you. We also recommend that you start building an emergency fund to prepare yourself for unexpected circumstances that may affect your finances. Besides, there is financial help available during the coronavirus pandemic

How Can I Increase My Income?

Instead of constantly borrowing money, you might consider boosting your income through these tips:

  • look for opportunities to increase income
  • reduce your spending and be frugal
  • check for benefits that you can qualify for
  • find ways to reduce bills like changing utility suppliers
  • get a debt advice