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Better ways to borrow than a payday loan

Better ways to borrow than a payday loan
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They are one of the quickest and simplest means of securing funds, but anyone taking out a PayDay loan pays heavily for this convenience. PayDay loans are one of the most expensive ways of borrowing money; failure to meet the strict repayment rules can quickly lead to the debt spiralling out of control and seriously affect your credit rating. We can all use a little injection of extra cash from time to time; it’s often in emergency situations that people turn to PayDay loans as the solution. But before you sign up for one take a moment to consider other possible options. It could save you £££.

What is the Loan For?

The idea behind PayDay loans (apart from being a money-spinner for the lenders) is to offer a service that provides people with cash quickly for emergencies. So, if your washing machine goes bang, your car breaks down, or your kids shoes fall to pieces and you simply don’t have the money to cover these expenses until PayDay, this type of loan could be for you. Once PayDay arrives you have the cash to spare and you pay back the loan. Job done. PayDay loans are intended to get people who know they WILL have the money in a short space of time, out of a fix.

If, however, you are turning to PayDay loans as a means of paying regular household bills and other general living expenses, they are perhaps not the right option for you. Needing cash to meet your basic needs means you don’t have enough money coming in full-stop. And supplementing your inadequate income with loans will only lead to debt. In these circumstances, it is far better to see a debt advisor. These money-experts can help you to organise your budget and may be able to assist in reducing repayments of existing debts a level that allows you to live within your means. There are many agencies and organisations offering these services for free.

Non-Essential Spending

There has been a sharp rise recently in people turning to PayDay loans as a way of generating cash for non-essential spending, such as a night out, a holiday, or buying clothes. While it may feel good to be able to acquire these things immediately, using PayDay loans to fund them means you end up paying far more than you need to. Far better to save up, use the money you would have had to fork out in interest on other indulgences for yourself. Don’t line the pockets of the lenders with your hard-earned money!

No-Interest Alternatives to PayDay Loans

Better ways to borrow than a payday loanIf you are planning to use a PayDay loan in the way it was intended (get the cash now, use your earnings to repay it on payday) then it’s worth talking to your employer about an advance. Many employers will be happy to help in genuine emergencies, giving you a partial or even full advance on your wages.

If you are dependent on Benefits for your income, you may also be eligible for a short-term advance, or an interest-free loan from the Social Fund, both of which will generally be repayable from your future payments. There are also Welfare Assistance Schemes operating at a local level all over the country, they can provide essential basics such as food vouchers, pre-payment cards for energy, white goods and furniture, if you are eligible.

In short, in either scenario it’s worth asking to avoid paying the crushing interest rates that PayDay loan organisations apply.

Family and friends can also prove to be a worthy source of emergency funds, provided you enjoy a good relationship with them in the first place. As with any loan, it’s important to agree a repayment schedule, this is perhaps even more important when family or friends are involved. If necessary, put your agreement in writing to protect your relationship from any conflict later.

Cards, Overdrafts and other Loans

If you already own a credit card you could request a temporary increase in your credit limit to provide a much-needed emergency cash injection. Credit card debt is expensive too, but their interest rates generally pale into insignificance compared with those of the PayDay loan providers.

Many banks will grant you an authorised overdraft limit on your account. You will generally be charged a small fee for using this each month that you do, but the charge will be minimal compared with those applied when you take out a PayDay loan.

Similarly, Credit Unions may be worth a look. They offer more affordable loans than PayDay providers and have a cap on the amount of interest they charge.

It’s always worth noting, wherever you borrow from the money will need to be paid back at some point. We all need emergency cash on occasions, but try to avoid getting into debt that is unnecessary. If you decide to borrow, then do your homework and limit your exposure as much as you can.

 

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About Cally Worden

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About Cally Worden

Seasoned freelance writer Cally Worden lives with her family and dog in a quiet corner of rural France. A love of the outdoors, and a fascination with her children's ability to view life with fresh eyes provide the inspiration for much of her work. Cally writes regularly for various websites and UK print publications on subjects as diverse as parenting, travel, lifestyle, and business, and anything that makes her smile.

Website: Cally Worden

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