What Are The Alternatives To Payday Loan
When you need to borrow for an unforeseen circumstance, and you are thinking about applying for a payday loan, you should stop and look at the other options of borrowing. If you cant keep up with repayments then Payday loan charges can increase rapidly and will also negatively affect your credit rating if you fail to pay on time.
Effective Ways to Borrow Money Over Payday Loans
Instead of a payday loan try to speak to your employer. They may be able to provide an advance on your wages.
If you claim benefits from the state, you can ask the job center for a small advance on your payments. You will need to pay this back out of your future payments. So your following installments will be reduced until the advance is settled.
One of the best ways to borrow money is from a credit union. Credit union loans are limited to 3% interest a month. There are no extra charges for early repayment on this type of loan either.
Family and Friends
Borrowing money from friends and relatives is a great way to avoid using payday loans. Remember if you can’t repay the money you stand to risk your relationship so you should outline exactly
- Repayment plan
- What happens if you are late or can’t repay
- Make sure you write out the agreement and both sign it
Only if you have a credit card, you can ask your provider to increase your credit limit, and often they are more than happy to do this providing you have a good history of repayments. Make sure you repay the balance of your card in full at the end of the month so you don’t get charged interest
Local welfare assistance scheme
If your in a difficult financial situation and need money for food, heating and clothing you might entitled help from the local welfare assistance scheme. The schemes will vary from town to town and will often be able to provide you, food vouchers, furniture and white goods. They also work with local food banks.
If you have a bank account, there is a chance you can get or increase your authorized overdraft. Interest on overdrafts can be quite high, as much as 20% but as long as you remain inside your authorized overdraft, it will work out cheaper than using a payday loan. Its important to always stay within your authorized overdraft, if you go over and into your unauthorized overdraft it will cost you a lot of money and can cause serious problems in the future.
Never consider a payday loan if you need to pay bills such as electricity, rent or other debts. If you are in the situation, you should contact the lenders and explain what is happening. Often they can help by reducing your monthly payments to make it more affordable. Also, speak to a debt advisor. This will help you to budget your money outgoings and provide information on how to clear your debts and avoid issues in the future.
Payday loans are attractive to people who struggle to save for items they want to own. Things like a new TV, clothes or treats. This is not what a payday loan should be used it. You will pay more for the item than if had saved up and you run the risk of missing repayments which will affect your credit score. There are various other less risky ways to borrow money.