Following a recent article on October 12th in the Financial Times about ‘borrowers urged to look at alternatives to payday lenders‘ we have compiled a helpful list of ways to obtain funds without taking out a payday loan. We appreciate that the high-cost nature of the loans we recommend and whilst the speed of a payday loan is ideal for an emergency, there are certainly payday loan alternatives available and other options for those who may be experiencing debt-related problems. In this page, we discuss various payday loan alternatives and ways of getting money if you need it quickly.
Borrowing from friends and family
This is one of the most traditional ways to borrow money, especially when you need it quickly. Although its not always easy to ask people you know for money, the majority of payday loans are for small amounts and if its less than £100 that you need, you may find that a family member is able to lend this to you. Above all, the best thing about borrowing from people you know is that there isn’t any interest or late penalties involved. So not only can you borrow the money you need but you won’t be worse off paying it back. This should probably be your first port of call when you are looking to borrow money.
Make money by selling your old items
You would be amazed how much junk we have lying around the house and there are people who are willing to pay money for it. Whether its selling your old goods at the local car boot sale or better, selling things online, can make you a few hundred pounds for one day’s work. Things that are people buy that are second-hand include clothes, CDs, mobile phones, gadgets and furniture.
The likes of Ebay and D-pop are ways that you can take pictures of your items on your phone and quickly upload them for someone to buy online. Facebook and Twitter are also useful ways to sell things online by advertising them to your friends. There is a lot of money in selling your old mobiles. Usually when you finish with a mobile phone, you just put it in your cupboard but there are companies that are willing to pay good money for a second hand mobile phone and if its a smartphone, a phone company like Envirofone could be willing to pay over £100 for it the next day. In some cases, this could be quicker than a payday loan.
Save money with discount and cashback sites
If you require a short term loan because you need to pay for something specific, there are several discount and cashback websites to help lower the cost. Whether its sites like VoucherCode, TopCashback or Quidco, the opportunity to get huge discounts on things like mobile phone bills, utilities and furniture mean that you could make big savings and avoid having to need a payday loan to fill the gap. The way cashback sites work is slightly different to a straightforward discount – instead of 20% being taken off the bill, you pay the full price and 20% of the cost is paid into your debit account as ‘cashback.’ So using a cashback site, you feel like you are actually being paid and you can see how much cash has been sent to your account.
0% Credit Card
There are various banks which offer a 0% credit card meaning that you take out the credit card and pay no interest provided that you pay on time. So if you feel comfortable that you will certainly be able to repay after a month, this could be a very sensible alternative. Money Saving Expert recommends a number of 0% credit cards from the likes of American Express, Tesco and Halifax. If you would normally borrow a few hundred pounds as a payday loan, a 0% credit card could provide you with the few hundred pounds and you will only pay if you miss the repayment, usually via direct debit on a monthly basis. Therefore, like any payday loan, you will need to stay on top of your repayments but it could prove significantly cheaper.
Credit Unions are also very sensible payday loan alternatives. This refers to a non-government organisation that offers very very low interest loans for similar amounts that you would borrow with a payday loan. A credit union is usually based in your community like in churches or on the high street and you are eligible based on your work position favouring those union members such as policemen, nurses, fireman, factory workers and teachers. The downside of borrowing from a credit union is that it takes a few days for the funds to clear which is why people might prefer our payday lenders because they are so much quicker. But to give you an idea of how much cheaper it is, CUOK! which is a credit union specialising in payday loan offers only £12 repayment for a £400 loan for a period of one month – far cheaper than other short term loan out there.
Where can I get advice about my debt?
Payday loans should not seen as a long-term solution to debt problems. If you think that maybe there are much longer term issues regarding your personal finances that an injection of cash won’t solve, it is worth seeking advice and speaking to professionals. For help, go to moneyadviceservice.org.uk