Alternatives To Payday Loans

When you're in an emergency and you need quick cash, the idea of payday loans might seem like an excellent solution. You can get your hands on the money you need quickly without having to worry about dealing with the credit bureaus if it's not paid back right away. But despite their allure, payday loans could be dangerous for borrowers who think this is their best option.

Even if there are clever payday loans their high-cost credit products can trap you in a cycle of debt and make it harder for you to take control of your finances. They are often the wrong solution to your short-term money problems. Before you take out a payday loan or any other type of short-term loan, there are several alternatives that you should consider first:

1 Saving and Managing Your Money Better

If you've got a sudden expense, think about whether you can save up for it instead. Use the money you get from overtime hours at work, or ask family and friends for help if necessary. It might take some time to accumulate enough savings but putting away even small amounts of money every week or month will add up over time. Consider using a budget planner or getting advice from a credit union or other financial service provider to help keep track of where your money goes and how much you're saving each month.

2. Get A Small Loan from Your Credit Union or Community Finance Provider

If you need emergency cash and want to avoid the high cost of paydays loans, many community finance organizations offer short-term loans at reasonable rates.

Some community finance organizations also offer savings plans to help you save over time for the things that matter to you.

3. Apply for A Bank Overdraft

If your payment doesn't come in as expected or unexpected bills need paying, an overdraft can be helpful. But it's important to use them responsibly and not rely on them too much. An overdraft is only free if you don't go beyond agreed limits. Any interest or charges will quickly eat into your spending money, so avoid piling up debt by carefully checking what limit the bank sets before borrowing more than you need.

4. Talk to Creditors About Delaying Payment

If an unexpected bill leaves you short of cash, speak to the people who owe you money and ask them if they can delay payment until your situation improves. If you're struggling to make regular repayments on credit cards, telephone or utility bills, then ask for help from your bank, local council, or the company involved might be able to advise you on what assistance is available.

5. Consider A Debt Management Plan

Your creditors may offer to set up a debt management plan (DMP), which involves negotiating with them to pay off all your debts over time at an affordable monthly amount so you can clear your debt more easily. You'll need to contact each creditor yourself, but it might be worth doing this rather than turning to expensive options like paydays loans. A DMP could include other types of borrowing, such as payday loans taken out in the past, so don't enter into one without carefully checking everything first.

6. Take Advantage of Free Debt Advice

Speak to an independent debt adviser about ways to manage debt without taking out more payday loans. Whether you are behind on bills or struggling with credit card payments, advisers can talk you through what options are available. Remember that you should repay all debts, but you can still get help to do this safely and responsibly.

7. Seek Government Support

If you're struggling to make ends meet or paying for essentials like food and housing costs has become difficult, then you might be able to get help from the Government. These benefits can be paid directly into your bank account.

Your local Citizens Advice Bureau may also offer free debt advice via workshops, telephone chat lines and individual appointments; these services are often confidential if you prefer not to mention them to friends or family members. The Money Advice Service offers free online tools like calculators, tips, videos and guides through its website, which can help with budgeting decisions or debt management.

8. Take Out Insurance

Most unexpected events are covered by home or contents insurance, health insurance or vehicle breakdown cover. But these policies can be expensive to maintain if you're struggling with other financial commitments. Consider whether your monthly premiums could be used more wisely instead of having this type of cover. If you have any chance of getting a refund, it's usually better to use the money for that rather than relying on payday loans.

9. Shell Out on Essentials

If there are some essentials you can't afford at the moment, explore alternatives like buying them in discount stores or taking advantage of internet shopping promotions. Spending less on groceries is easier when you plan what you buy and stick to the weekly menu instead of impulsively buying things during the day. If you need something, consider whether it's worth borrowing to pay for it and what will happen if the bill is higher than expected.

10. Use A Credit Union

If you have any savings or a valuable diamond ring or piece of jewelry, then consider using it as security for an offer from your local credit union to borrow money. It can help avoid taking out payday loans and give you the chance to pay back the loan over a longer period. However, if you don't think that you'll be able to afford the repayment, this might not be the best option and remember that it could affect your entitlement for other types of financial support in future years.

Summing Up

Check out all the different ways to save money and get help with debt before you consider taking out a payday loan. Remember that payday loans might be quick and easy to access, but they are also addictive so try to pay them back in full as soon as possible. Trying to repay them over a long time could lead to further financial problems, and things like late payments and enforcement action will only cause more stress in the short term. It would be best never to let debt management issues spoil your quality of life or affect relationships with friends and family.