Although payday loans in the UK can be a great lending product, offering a unique short term solution to cash flow issues, they are not for everyone. If you’re currently looking to borrow some cash but you don’t think that applying for a payday loan is the answer then take a look at some of the payday loan alternative options available and why they might be better for you.
Here are Some Payday Loan Alternatives
Credit cards – bad credits. When you need to access cash – flexibly – then credit cards can be a good option, as long as you know you can afford to make at least the minimum repayment every month. If you don’t have a great credit rating then this type of card could help you – using and paying it off on time will show lenders looking at your credit report that you can successfully manage credit. As this type of card is available to someone without perfect credit the APR tends to be higher than some other credit cards but is still lower than many other short term lending options. Despite the fact that their rates are higher these cards can be a useful financial resource and some even offer discounts or the chance to collect points.
Personal loans. If you’re looking to borrow over a longer period of time than a payday loan then personal loans offer a great solution. There are many different types available, with various repayment periods, interest rates and loan amounts. They are more structured than taking out a credit card as you make regular repayments of a set amount each month and in most cases once you have repaid the money you can’t reborrow it again. Interest is charged on personal loans and this varies from lender to lender – remember that the APR is compounded interest, based on borrowing money for a longer period of time, so if you’re taking out a shorter term personal loan look for a lender who can tell you exactly how much interest is involved for your requirements, rather than relying on comparing APRs.
Guarantor loans. This breed of loan is much more flexible than other types of borrowing, including payday loans, in that it offers the option of your loan application being backed up by someone else. If you’re young or your finances aren’t particularly stable, but you know you can make the repayments, then you can ask someone else to guarantee your borrowing, which means the lender is more likely to loan you the money. Anyone can be your guarantor as long as they are aged 18-75 and financially stable.
Logbook loans. If you have struggled to get other forms of finance, such as payday loans, but you have a car then logbook loans might be an option for you. Essentially, this type of finance uses your car as collateral for the loan. This means that if you can’t repay the loan the lender can possess your car in order to do so. Unless it’s a classic or prestige vehicle your car needs to be less than 10 years old to be eligible, as well as free of any finance. You can apply for up to 70% of the value of the car with this type of loan.