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Payday loan alternatives could be the best solution when you are experiencing financial difficulties. It could be the best thing to do rather than the common payday loan lenders that might put you in more debt.
The recent global economic downturn has caused thousands of job loss. Also, it helps the popularity of payday loan lending companies as many families find themselves in financial problems.
Things can still go wrong even if you have saved enough cash as a back-up for financial emergencies. There are times when the backup cash may not be enough to service financial debts.
Why payday loan?
Most people get into payday loans in an emergency situation because they feel it will give them a short-cut to effectively meet their mid month monetary issues.
Nowadays, payday loan lending is a big business that is so popular that you can feel their presence in almost every corner of our streets. It seems like it’s very easy to get a payday loan; people can just walk into any of these payday loan lender shops or apply for a payday loan online.
The media has been bombarded with all sorts of payday loan advertisements. You can’t even watch an hour of a television programme without an advert or two of a payday loan lender.
They are all telling you how easy it’s to get a payday loan. But how true are their claims? How do you know if you qualify for a Payday Loan?
But behind this recent popularity of payday loans is the hidden fact that customers often find the repayment terms of traditional payday loans difficult to meet. This is why it’s important to compare and shop around for better payday loan offers.
Payday loan alternatives you should consider
First of all, you need to understand that there are no official payday loan alternatives out there that you can rightly get. However, there are other ways through which you can be able to pay for emergencies without a payday loan or cheque advance.
Before you make up your mind and decide that a payday loan is the only solution to your financial worries, it is advisable to consider some of these payday loan alternatives.
#1]. Set a budget and spend less
People are usually faced with financial difficulties after having stretched their finances usually through spending. You will have to budget and check your spending in order to prevent you from being a customer of one of these payday loan lenders. Simply put, having a budget can help you manage your spending as well as get you back on track so you have enough for both bills and treats.
The idea is not just for you to spend within your means (spend what you earn), but also for you to spend wisely. By taking a closer look at your monthly spending habits you will be able to determine where you need to exercise some kind of restraint.
#2]. Look for additional income
When you find yourself in financial difficulties, one of the best solutions you should first consider is whether you can be able to raise money through additional income. If you have a hobby or skill that’s in demand, you can offer your services to people in exchange for money. This could earn you additional income to meet your financial obligations.
Likewise, you can also try to work overtime; work a few extra hours to get some overtime pay if your employer allows it. Another good option is to use websites like eBay to sell some of your old stuff to raise some extra cash to get you through.
#3]. Join your local credit unions
You can also explore the opportunities offered by the Credit Unions. Credit Unions are community-based organisations and they are not-for-profit because they are not set up to make a profit on the money they lend you.
Although their loans can take longer to arrange, Credit Unions offer cheaper payday loans. You could choose to repay over three months and they are limited by law to an APR of 26.8%.
However, you have to be a member to use Credit Union services. So, all you have to do is to join your local credit union. Credit Unions also offer more affordable loans at 13.86% APR for people with a poor credit history.
#4]. Get crisis loan/grant or borrow from friend or family
The government’s social fund can also provide crisis loans for emergencies and budgeting loans for people on benefits such as income support, income-related employment/support allowance, income-based jobseeker’s allowance and pension credit.
With this type of loan, you can be able to borrow between £100 and £1,500, and it is interest-free which means that you only pay back the amount you borrowed. Another payday loan alternative is to borrow money from a friend or family member.
But it’s advisable to make sure that you pay the money back on time as money and friends or family often don’t mix.
#5]. Ask your employer for a payday-advance
Your employer could turn out to be the best bet for you when you need a payday loan by politely asking for an advance on your wages. This is a great option that wouldn’t put you in any financial trouble.
Simply put, it’s the same thing as a payday loan, without the risk of falling into a pit of debt through the excessive fees and loan trap. Some companies with a good cash flow can even give loans that can be repaid over multiple pay periods, lessening the effect on your take-home pay.