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Alternatives to payday loans

Alternatives to payday loans
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When you’re surviving on a tight budget, even a small emergency can seem like the end of the world. Often payday loans are seen as the solution for short term lending, but these have extremely high interest rates and you can end up in a cycle of debt. There are alternatives to payday loans if you’re struggling financially.

Move your payments

If your money problems are only temporary, you could contact your creditors and utility suppliers to see if you can move some payments. Most companies will be helpful if you tell them in advance, rather than waiting till a payment bounces. This extra money could help if you have a short term emergency and you can move the payments till you get paid.

Make some extra money

Most of us have items at home that we no longer need or use and you could make some money out of them. Use sites such as Ebay, Preloved, Gumtree or local selling groups to advertise anything from toys and clothes to furniture and electricals. You might be surprised what other people are looking to buy.

Use a Foodbank

There are a growing number of Foodbanks opening across the country that can help you if you’re struggling to find money for food. The largest provider is The Trussell Trust who operates around 400 foodbanks. They will exchange vouchers received from professionals, such as a health visitor or social worker, for at least three days worth of essential supplies.

Borrow from a Credit Union

The number of credit unions has increased as more people struggle to access financial products. They’re a useful alternative if you’re likely to be declined for a bank loan and they encourage customers to save regularly and only borrow what they can afford to repay. Different unions have their own criteria, but many will allow new customers to take out a small loan once you’ve opened a savings account. The loans offer competitive interest rates and varying repayment periods depending on the amount borrowed and your circumstances.Alternatives to payday loans

Budgeting loan

If you’re in receipt of certain benefits, then you might be eligible for a budgeting loan. This can be used to cover essential expenses, including rent, food and clothing. The minimum amount you can borrow is £100, but the actual figure will depend on your circumstances. The loans are interest free and can be paid back over a period of up to two years.

Overdraft

These can be a costly way of borrowing money, but if used correctly can be effective in the short term. If you don’t already have an overdraft then you can ask your bank for a small amount to cover you temporarily. There will be charges, such as an administration fee and interest, but you can keep these to a minimum by going back into credit. If you think you’d be tempted to keep using it, you can request that the bank cancels the facility once your account is in credit.

Family and friends

There can be problems with borrowing money from family and friends, so this should probably be the last resort. You need to ensure that you can pay the money back when you say you will, other wise there’s the risk of your friendship being affected. However, most family and close friends would be happy to lend you a small amount rather than you having to borrow from a payday lender.

These show that there is an alternative to payday lenders if you’re struggling. It’s important to look at all the options before taking out expensive loans.

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About Catherine Stern

About Catherine Stern

Catherine Stern is a freelance writer with a background in marketing and PR. She currently writes web content on a range of subjects, from finance and business to travel and home improvements. As a working single mum of two young boys she understands the pressures that today’s working parents face and the topics they want to read about.

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