4 Alternatives To Payday Loan That Are Actually Safer

Payday loans have become a popular way for people to borrow small amounts of money and get access to it usually the same day. Typically people will use payday loans as a method to pay for an unforeseen cost but more and more people are using payday loans to get access to money to buy luxury items and treating it as a quick fix. People often fall into the trap of taking out a second payday loan to pay for the first and the cycle continues. This article aim to help people before they fall into this trap by suggestion other, cheaper ways to borrow money.

The cheapest way to borrow money will depend on your needs and circumstances. These include low APR loans, bank overdrafts or 0% interest credit cards.

It’s not always clear what the best way to borrow money is when you are searching online. While there is no solution that fits everyone the same with borrowing money there are ways to get the cheapest and best deals.

Everyone has their own financial situation and circumstances. Before you begin searching for ways to borrow money its a good idea to set out what exactly you want to do with the money, how much you actually need and how you will pay it back.

Bank overdraft

Another cheap option is using your bank authorized overdraft facility. While cheap it can work out very expensive if you go into an unauthorized overdraft.

If you only need a small sum of money then it can be a cheap way to borrow money for a short amount of time.

Th amount you can borrow will depend on your bank so you will need to visit a branch or give them a call to find out what you can borrow without getting charged (agreed overdraft limit)

You will probably be able to get a much better deal if you have been a customer for a long time and have good history with the bank so its always worth trying to negotiate the best deal.

Just remember to always pay off the amount as soon as you can to avoid getting sucked into the overdraft trap.

0% Credit Cards

A cheap way to borrow money is to apply for a 0% purchase credit card. These cards will allow you to make purchases without incurring any interest for a set period of time.

Often people who have a good credit report will be offered the longest 0% periods than those who have a poorer credit report and will be offered reduced terms.

Its important to use this type of card effectively. For example this type of card could be used to reduce your car insurance payments. If you are quoted £500 per year for insurance and pay the full balance or £600 if you pay it off monthly you can pay the full insurance balance off in full and pay this amount back on the credit card which would save you £100.

Remember to make a note of when the 0% APR has finished and at what rate the new APR will be as typically the APR will jump to a higher figure than a card which had a low APR to start with. A good way to do this is to set a calendar reminder on your phone for 7 days before the interest free period ends, giving you enough time to cancel the card.

Bank Loan

If you have been a customer of your bank for a long time you can probably get a loan with a preferential rate which are given to existing customer. Give the bank a call to find out what deal you can get and if you are entitled to a preferential rate. If not you might want to consider moving banks as you can often get a better to move your current account

Don’t forget to shop around on comparison sites to see what rates you might be able to get.

If you have a good account history of managing money and a good credit score, securing a bank loan shouldn’t be too hard depending on how much you plan to borrow.

Unsecured or Personal Loan

Unsecured or Personal Loans are a way to borrow between £1000 and £35000 (sometimes more) for between one and fifteen years.

Usually you will get a much lower APR than any other form of borrowing but the best rates are saved to those who have a great credit score. Unsecured or Personal Loans will be paid back on a set monthly repayment amount and term which makes them inflexible and will mean you must have a plan on how you will pay the money back and you can afford to do so. Good financial housekeeping will ensure you are setting budgets and plans for making the repayments and help you to avoid issues in the future.