The payday loan business has been in the spotlight lately. Their adverts are everywhere – even on Premier League football shirts – and the Government has asked the industry to clean up its act. You’d think all this fuss would scare people away, but the business is booming.
Times are hard and all those adverts aren’t for nothing, when things are tough, the payday loaners want you to see them as the only answer, but they needn’t be.
Here are five alternatives to try before you log on to a payday loan site.
1 – Learn to live within your means
This may sound harsh, but the best way to avoid resorting to back credit is to stay out of debt. It is by no means something that everyone takes to naturally, and there’s no shame in admitting you need a little help with running a budget.
If you can make a list of all your monthly outgoings, you can start to get on top of what you can and cannot control and limit. Setting a budget is the first thing that a debt counsellor will advise you to do, so why not do it before you get that far. People who end up in debt often hide from the truth and it’s the worse thing you can do. Start to take control and you’ll feel enormously empowered and may even learn to love saving and bargain hunting.
2 – Head to the attic
Now, not all of us have a hidden Picasso we can take to the auction house, but in these days of internet you can reach the whole world and you’ll be surprised by the interest you can get for something that you consider junk.
There are any number of websites that will help you unite your goods with their future owners. Special sites have grown up for mobile phones, gold, even parking space on your drive. Do some research and get selling.
3. Go to Your Local Credit Union
How about borrowing money from someone who isn’t even worried about making a profit? You’re bound to get better terms than the firms advertising on TV. You’ll also be doing something to support a community organisation and may even be inspired to get involved yourself. Most areas have a credit union, do a search online or visit your local library to find out about yours. They’re still regulated by the same rules as the big banks and in time, you can start to save with them.
4 – Take out an Authorised Overdraft
Payday loans tend to be the action of last resort, which is never the best place to be if you want to think rationally about your situation. It may be that you’re borrowing to pay off an overdraft, in which case stop and think. Piling debt on debt is never a good thing and it’s time to face up to your problems and ask for some help.We’ve all heard horror stories so let’s beware. With an autorised overdraft the biggest thing to keep an eye on is the interest percentage – the days of PPI and having to make a payment protection insurance claim are gone thankfully.
Your bank wants you to pay them back, which won’t happen if you end up bankrupt. If you find yourself in trouble, tell them and see what happens, you may be able to arrange a repayment schedule to suit your circumstances. If you need help, there are several free debt advice charities – the CAB are probably still the biggest – who will represent you.
If things haven’t got that far, an authorised overdraft will almost certainly be a better deal than anything the payday lenders will have on offer.
5 – Borrow on Your Credit Card
Credit card cash is usually the best value credit you can find. Many credit card companies – and there are a huge number now, from the bargain basement up to Amex cards – are desperate for new business and offer very decent terms to put cash into your account straight away.
Always bear in mind, that debt is not best dealt with with more debt.
If you get in credit trouble, the first and best thing you can do is admit your problem and ask for help.
Cormac Reynolds offers financial advise on a range of different areas for a number of blogs. He has written about this area for around half a decade now.