UK households are grappling with growing debt. In 2016, only 8% of those who sought advice from the Citizens Advice Bureau about instant loans had this as a sole issue. It’s clear: the situation that you find yourself in may be far from straightforward and may want to avoid instant loans.
If you’re struggling with debt, it is advisable that you avoid instant loans if they’ll worsen your situation. But how can you be sure of what’s best, whether you are indeed in debt crisis or what the alternatives are to avoid instant loans?
Avoid instant loans: Start with these 2 key questions
Instant loans are a convenient, efficient and fast form of finance for those facing a temporary financial emergency. When used correctly instant loans are entirely safe and can even repair a poor credit file. However, they shouldn’t be used on a regular basis in a cycle of debt – doing so will almost certainly worsen your financial situation. If you’re unsure whether you’re in a debt crisis, ask yourself:
Are you struggling to cover all of your basic needs – such as your rent, mortgage, energy bills and credit card minimums?
Do your debts amount to more than your after-tax income?
If you’ve answered yes to either of these questions, you should rethink whether an instant loan is right for you and if you should avoid instant loans.
What if you can’t avoid instant loans?
If you have no other option but to use an instant loan, there are steps you can take to use this credit facility responsibly. When used correctly, with all of your payment obligations met, an instant loan can actually improve your credit history, as a completed loan is effectively a positive marker on your file. Here are some simple guidelines for using an instant loan…
- Ensure that you can meet all of your repayments on time before you take the loan out
- Be sure that you fully understand how your instant loan works (you should start with our guide to ‘How do Instant Loans Work?’.
- If you think that you’ll struggle to meet an upcoming loan payment, contact your loan provider as soon as you’re able. They will almost certainly allow you to roll your payment over a set number of times.
- Take steps to tackle your money management (we provide a budget template and a five-step debt process in the next section).
Avoid Instant Loans: Understanding your debt
If you’re in debt the first thing you should understand is that you are far from alone. Personal UK debt is at an all-time record high (even higher than levels identified before and during the credit crisis). In 2016 alone, Britons entered a further £1046 of debt as compared to the year before, with the average adult now owing £30,000.
Source: This is Money
Four steps to addressing your debt
- Create a debt overview chart – this is the first step to tackling your financial situation head on
- Speak with your creditors – they are legally obliged to consider any offer of repayment you make and may be able to freeze your interest
- Seek impartial advice from one of the bodies we suggest
- Create an incoming and outgoing budget using the template below – if your expenditure is more than your income, you need to cut your costs (read this ‘Stop Spending’ guide from Martin Lewis as a good starting point).
Where can I seek advice on my debt?
There are many excellent UK charities and impartial organisations that can provide you with free advice on money matters. Here’s an overview of the three most popular…
The Citizens Advice Bureau – The Citizens Advice Bureau can be contacted online, by phone or in person via your local branch. Their 21,000 volunteers are highly knowledgeable about the instant loan market (you can read their 2016 report on the post-FCA guidelines industry here).
The Money Advice Service – The Money Advice Service helps with all things money – from budgeting and saving to debt and borrowing. Set up by the Government, this resource provides essential advice, guides, tools and support to help you manage your finances better.
The Debt Advice Foundation – The Debt Advice Foundations are a specialist charity that offers completely free, confidential advice on debt. They provide a debt helpline call back service and extensive online resources.
A word of caution on debt originations
Take care when looking for free advice about your debts – there are many companies that can appear as not-for-profit organisations. Amongst these are unscrupulous outfits that talk you into an IVA (an Individual Voluntary Arrangement) when this isn’t truly suitable for your needs and on which the company would profit from. To be completely safe, use one of the three organisations we’ve suggested in this article.
Find out your instant loan options with CashLady – Apply Now
If you’re unable to avoid using an instant loan you should choose your provider carefully. CashLady is an FCA Authorised, Award Winning Credit Broker. We are members of the ICO and are held in high esteem by our customers (read their reviews on Smart Money People & Reviews.co.uk).
Speak with a member of the CashLady team to discuss whether an instant loan is right for your situation. You can also gain instant answers on our FAQ page or via our live chat feature. Finally, you may want to consider alternatives to instant loans, in which case you should read our ‘What are the alternatives to instant loans?’ guide.