When you only need a small amount of cash to tide you over for a short amount of time, you may be tempted to consider the benefits of a payday loan. Unfortunately, although the amount of interest that is allowed to be charged each day on a payday loan has now been decreased by the financial conduct authority, these types of lending agreements are often criticised for their huge repayments. What’s more, payday loan companies are frequently criticised for rolling loans multiple times, costing borrowers far more in interest charges.
The government throughout the UK, as well as various financial and consumer bodies have expressed some concern that payday loans are often not the best solution for people with money problems. Your best bet is to consider what alternative options might be available to you on today’s market. Remember, there are a range of lending opportunities out there to consider.
Credit Union Loans
Across the country, many credit union loans are regarded as the perfect alternative to people in need of payday loans. These credit union loans offer a small interest rate, and most credit unions are willing to offer credit to people who have been refused by major lenders and banks. There are a range of different types of credit union out there today, and many will have specific criteria that you will need to meet for your application to be successful.
There are also credit unions available to people who are living in specific locations, working within certain industries, or are part of a particular organisation or group. Certain people will find that they need to have some amount of money invested in a credit union – usually in some form of savings account before they are able to benefit from a short-term loan. However, as new options emerge across the country, there are solutions out there for people who do not have existing credit union accounts.
Your best bet is generally to check the criteria that has been posted surrounding the loan before you attempt to apply for it. However, you may find that you have to wait for a long time for your credit union application to be addressed.
Employer Cash Advances and Borrowing from Family /Friends
One alternative to getting a payday loan is to simply approach your boss and let them know about your current situation. If you find that you need some extra money to tide you over until your next pay because of a sudden emergency in your life – such as a sudden breakdown or medical mill, you may find that your employer is willing to help. In some cases, employers will be willing to give you a small amount of your wages for the next month in advance, and this simply means that you’ll get less the next time you are paid.
The biggest benefit of getting an employer advance is that you won’t need to pay for any administration or interest costs. Of course, many people struggle to feel comfortable when asking for a cash advance from an employer. However, if you have already built a good relationship with your employer over time then you might find that it’s easier to ask them whether you can borrow money. A cash advance can help you to avoid getting into debt with huge interest repayments.
In some cases, a really good employer might even allow you to repay the money that you owe on your cash advance over a period of several months. On the other hand, they may ask you to do some extra overtime in order to cover the amount you owe.
Alternatively, if you can’t borrow money from your employer for whatever reason, there’s always the option to turn to friends and family. Much of the time, if your friends and family have the money to help you out, they will be willing to do so – as long as the situation isn’t a regularly-occurring one.
However, you should be careful if you are considering borrowing money from family or friends, as failure to repay this money on time could mean that you end up losing important relationships. Make sure that you keep track of payments and do your best to avoid arguments wherever possible.
Finally, one particularly useful alternative to a payday loan is an authorised overdraft. These overdrafts are when you can borrow a little extra cash through your bank account by simply dipping into a negative bank balance. Most overdrafts are only available up until a certain point, and you will usually be charged interest or have to pay a daily set fee for using that overdraft. This can mean that in some cases credit cards can be a cheaper option.
However, if you have a bank account that offers a 0% overdraft then you might be able to borrow the extra money you need for free. Just make sure that your overdraft has already been authorised with your bank provider. Don’t simply assume that you can dip into the negatives without asking, as an un-authorised overdraft can cost you a lot in terms of interest and fines.