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5 alternatives to taking out a payday loan
05
SEP
2014

5 alternatives to taking out a payday loan

The sheer demand for payday loans appears to have suggested that there are times when we all find our pay cheque doesn't quite go far enough. Whatever the reason, it can often, on the face of things at least, seem like a payday loan is the best course of action as it enables quick and easy access to cash.

However, the high levels of interest on any debt that arises as a result of borrowing from a payday lender means that many people may find it hugely difficult to clear the amount they owe, starting a spiral of borrowing and spending beyond one's means.

People borrow money from short-term lenders for all sorts of reasons, but it is always worth bearing in mind that there is often a viable alternative to the payday loan.

Paying for energy bills or other utilities

This is arguably one of the main reasons for people taking out a payday loan as they are often worried about the effect of not being able to pay will have on their credit rating.

However, there are other solutions available that will allow you to get some breathing space.

The first thing to do is to get in touch with your supplier as they will be able allow you to choose an arrangement that will suit you in terms of affordability.

So long as you call straight away and do not ignore your bill, it is highly unlikely that your supply will be disconnected.

Never use a payday loan to pay off other credit

Again, it is never advisable to use a short-terms loan to pay off any existing credit as it can cause your outstanding debts to spiral out of control.

As with energy bills, it is always important to ensure you have a suitable level of communication with those you owe money as there may be an opportunity to come to an arrangement that will allow you to lower your repayments to a more manageable sum until your financial situation improves.

Remember that a credit card company has to treat fairly and with consideration, which includes giving you reasonable amount of time to pay off the debt. Possible measures include the freezing of interest or charges.

Finally, prioritise your bills and agree to repay what you can afford.

Paying for everyday essentials

Now that the kids have gone back to school, there is likely to be a bit more a strain placed on your financial resources.

There are times when we can all find that our pay doesn't quite go far enough, but there are alternatives to the short-term loan available.

One of the first ports of call is to see if your employer can give you an advance on your pay. Many employers will be able to offer this service so long as you give enough prior warning.

If not then it is also worth asking to see if your family or friends can help you out, although it is always advisable to make sure you have a clear agreement as to when to pay back the cash.

It is always worth bearing in mind that even if you have  a poor credit rating, there are still other options, such as credit cards or authorised overdrafts, although this is only an option if you are sure you will be able to repay what you owe by the end of the month.

Home or car repairs

It is almost impossible to predict when something will break or stop working, meaning that it is very difficult for many people to ensure they are adequately prepared if the worst should happen.

The best thing to do is to try and negotiate a payment plan or see if it is possible to ensure your bill can wait until the next payday.

 

Advances on pay and borrowing of friends and family should also be considered viable alternatives.

Borrowing to go out

Many people see socialising during their free time as being an integral part of their everyday lives, despite any financial constraints.

The simplest way to save money is to obviously stay in. However, if you simply have to meet up with your friends to socialise then consider partaking in cheaper activities.

If in doubt ask

There are a number of ways you can help to improve your balance sheet. However, if you are left in any doubt at all then it is always advisable to seek financial advice.

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