Short-term Loan Alternatives in the UK
Short-term loans may seem like a good idea to get out of a jam and obtain quick cash, but they hardly ever accomplish what you need them to. These loans shouldn’t be used for non-essential purchases. For example you shouldn’t use short-term loans to finance a holiday, to get money to go out, or to buy clothes.
This will only lead to you spending a lot more money paying the company back in interest and fees. According to specialists from the site MoneyPug, which is used to compare the short-term loans, they should never be used to pay back other loans. In fact, this is exactly how these companies make the bulk of their money. First go through the alternatives to see if there are solutions when your need cash.
Speak to a Debt Advisor
If you are in debt, you should speak to a free and confidential debt service. These people can guide you out of the rabbit hole. From there you can continue to practice responsible spending. Using a budget planner will also help you save money.
Borrow from Friends or Family
You may simply need cash for an unexpected event or emergency. The best way to get out of a jam is to borrow money from family or friends. While this isn’t possible for everyone, it is a good place to start before considering high interest short-term loans. If there are any reservations about this from your loved ones, you can always put the agreement in writing and outline a repayment plan.
Request an Advance
The reason payday loans are called that is because they prey on people who run out of money before they get paid. To avoid this, you can ask for an advance on your wages from your employer. Each business has its own policies, but it is always worth asking before you take out a high interest short-term loan.
Pursue Welfare Programs
When you need the essentials, there are many welfare programs that will put food on the table and clothes on your back. Furthermore, if debt is the problem you can ask whoever lent it to you for smaller payments. Even if you’re struggling with paying for heat, you can find assistance. The point is, for essentials there are many options to avoid the perils of credit loans.
Borrow from a Bank or Credit Union
There are certainly better alternatives than borrowing from a bank, but they allow people to get the money they need to tide them over until the next paycheck without a taking out a loan. Using a credit card, you pay off every month can help build credit while providing extra finances. These interest rates are high, though, so be careful. Another option is using an authorized overdraft, meaning you can make sure that you pay for what you need to for a small fee. Finally, the best options out of these is to borrow from a credit union, which have limits on what they can charge for interest.
The truth of the matter is you shouldn’t take out a high interest loan unless you have exhausted all of your other options. Even then, when you have decided to take one out, it is advisable to look for the cheapest interest rates. Once you have found the lowest fees, you will be able to get out of the situation without throwing too much money in the trash. If you decide to take out a short-term loan, you should know the most competitive prices and how you can get the lowest possible rates. Only then will you be able to escape debt.