Money troubles are stressful and lead to sleepless nights. Life can throw curveballs our way where our best laid plans go awry. Losing a job, splitting up with your partner, becoming ill or having a baby can all lead to financial strain. At such times it is all too easy to panic and think that a payday loan is your only solution. I would urge you to consider alternatives to payday loans to get you out of a cash crisis. Payday loans can make your current financial problems worse and affect your credit rating if you cannot meet the repayments.
Free alternatives to payday loans
There are a number of charities who offer free debt counselling. They will keep your situation confidential and not be judgemental about it. You may feel embarrassed but they will have seen situations like yours before. They will help you look at your income and expenditure. They will help you to prioritise your debts and come up with effective strategies to move you forward positively. Many of them will write to and telephone creditors on your behalf. Good money advice agencies will work out if you are entitled to any welfare benefits and grants too.
Credit unions offer low-cost loans and you can usually find one near to where you live. You need to become a member and sometimes you have to build up a few savings before you can borrow from them. By law credit unions cannot charge you more than 3% per month which works out at a 42.6% annual percentage rate.
The brilliant thing about credit unions is that they have a community feel and there are no hidden charges or penalties. If you must borrow money at all, I highly recommend credit unions.
If you have a bank account you can ask your bank for an overdraft. These can be quite expensive but individual banks may have special offers such as interest-free overdrafts. Usually overdrafts are a cheaper option than payday loans. It is not good practice to fall into relying on overdrafts to manage your financial situation.
Other alternatives to payday loans
Other alternatives to payday loans you might want to consider include asking your employer for an advance on your wages or borrowing from someone who cares about you. Too many people get themselves into repayment arrangements they cannot manage from financial institutions when a friend or family member would have helped out had they been asked.
Polar Credit allows online applications for credit lines. Interest is paid on the amount of money drawn out of that credit line. Repayments need to be made monthly and the company take into account the individual’s current financial circumstances. The benefits seem to be that you don’t have to get tied in to borrowing a large amount and you can open an account quickly. You don’t need to find a guarantor either. Obviously the best way to use this facility should you decide to go down this route would be to ensure you can meet the repayments and to use it for short-term financial issues.
What do you feel are the best alternatives to payday loans?