What Alternatives are there to Payday Loans?
If you are struggling for cash at the moment, or you are facing an unexpected cost, you might be looking at your options to help you out in the short-term. Depending on your specific situation the best choice could be to take out a payday loan. You’ll have seen recently that payday loan companies with high interest rates and the collapse of certain big payday loan companies in the industry have given the sector a bad reputation once again. There are bad apples within every sector, but it is important to understand that there are still responsible payday loan lenders in the sector, and with some research you can find them. What other options do you have open to you though if you’re not quite sure whether a payday loan is the right choice for you?
If you are thinking about borrowing money you should never restrict your choices to just payday loans, or any other type of credit facility for that matter. Always start at the beginning and write down exactly what it is you need, and work out whether you can actually afford to borrow in the first place. If you do not have the means (or income) with which to pay back a loan of any kind the issue should be counted as a non-starter. The last thing you want is to get into a cycle of debt that you struggle to get out of, just for that short-term fix. You might be able to fix your boiler tomorrow, but what will it mean if you’re still paying off the interest to the loan you took out in 12 months’ time? Always be aware of your own personal, financial limitations before signing on the dotted line to borrow money from any institution.
What alternatives to payday loans are there?
If you are looking to borrow for essential items, such as groceries, or unexpected bills and repair and maintenance issues, it might be best to look for a short-term loan of some kind. This doesn’t have to necessarily come from a payday loan company, it can come in the form of an advance from your employer, a personal loan from a relative or friend, or a credit card. As long as you are aware of the responsibilities you have (especially when borrowing from friends and relatives and the strain the relationship could suffer from if you fail to pay it back on time) you are good to go, covering the cost of essentials.
For non-essential spending you should maybe look at things a little differently. Use a budget planner to work out how much money you have coming in and going out each month, and you’ll be able to see how much extra you have to spend on non-essential items. Never go beyond this limit, as to borrow just to go on a night out, or to pay for some clothes as a treat could end up with you in a cycle of debt for no good reason.
Looking at all of your available options for credit is an important process to go through. You should never sign up to any kind of financial product or credit service without being fully informed and understanding the fine detail of the small print. A payday loan could be the right option for your specific needs, even after you have looked at all the alternatives, and if it is that is fine. Just always be sure that even after you make the choice to go down the payday loan route, that you research different lenders to find a payday loan company that is right for your specific story and requirements.