Six Substitutes for a Payday Loan

A few people have considered payday loans as a part of their life. In fact, based on data from the Consumer Credit Counseling Services, 1.2 million people used them in the previous year. While payday loans can be an option in solving a financial problem, it is quite expensive and a temporary, short-term solution.

Since a payday loan will more or less make your debts worse, here are some alternatives to getting a payday loan.

First, reduce your spending and budget. Getting a payday loan entails a greater risk of having more debt, so budget your money well in order to allocate enough for your expenses.

Second, request for an advance from your employer. Some companies with good cash flow will more likely allow you to get your wage in advance and they typically deduct the amount in your next pay slip. Moreover, you can also ask to work overtime from your employer so that you can increase your salary and sort out your expenses.

Third, you can get benefits entitled to you. Check for benefits that you qualify for. Some of these benefits are Working Tax Credit, Child Benefit, and Jobseeker’s Allowance.

Fourth, you can get an authorized overdraft from your bank. Normally, overdrafts have interest rates between 12 percent and 20 percent.

Fifth, consider getting a budgeting loan. This kind of loan is offered by the Government to those on income support, income-related allowance, income-based jobseeker’s allowance and pension credit. The loans they offer range from £100 to £1,500, which are not charged with interest and you have 104 weeks to pay it back.

Sixth, look for a free debt advice. Based on the data of CCCS, 45 percent of people wait for more than one year before deciding to get some debt help. Some charities that might be of help include Consumer Credit Counseling Service, National Debtline, and Citizens Advice Bureau.