Alternatives to Payday Loans
Payday loans are hot in UK today because it’s fast, easy and convenient. Unlike with conventional loans from banks, you won't need an asset to serve as security to get the loan. It is no wonder, therefore, that the financial product is a top choice for easy money and quick fix solutions to short-term monetary problems.
Though widely available, many experts still discouraged borrowers to get payday loans mainly because of the pitfalls and the high costs. The loan may be an option but you should only consider it as the last resort. Before applying for one, make sure to look out the following alternatives first:
As long as you're employed with a steady, you can always try credit unions. Not only does this option offer cheaper interest rate but it is also less strict with repayments. If you delay or miss a payment, you can make arrangement with your credit union. Approval for short term credit union loans may not be as fast as payday loans but it can be quick if it's for emergency.
To know more about how credit unions work, check what Money Saving Expert has to say at http://www.moneysavingexpert.com/banking/credit-unions.
Family and Friends
If you only need like £100 for an overdue bill, you might want to borrow from family and friends instead. If the amount is small, chances are they have something extra for you. Most of the time, they're not going to ask for interest but if they do, it is going to be a lot less than what payday loans cost. You also don't have to worry about additional fees in cases you miss a payment.
Small Consumer Loans
Another less costly option to try is small consumer loans. If you are eligible, you can borrow up to £1,000 at about 60% APR or less. Just by looking at the percentage, you'll immediately see that payday loans are very expensive. If you can avail this one, you should get this instead of opting for a payday loan right away.
If the aforementioned options do not work for you, another alternative is peer-to-peer lending. As the name imply, you are going to get the loan from a peer at a lower interest rate. This can be anyone who is willing to lend you the amount that you need at an agreed upon interest rate. The repayment term will depend on how you set it up from your lender.
Cash Advance from Credit Card
If you have a credit card with available balance, getting cash advance through this medium is way cheaper than payday loans. APR for this type of loans is only about 30%. Some companies also help people with bad credit so you might get a good deal if you look at this option first before settling for a payday loan.
If you’ve tried all the listed alternatives yet still fail to get a loan then that’s the time when you should consider getting a payday loan. But again, remember to exhaust every alternative before settling.