People are using more and more credit every year and according to the BBC, £1.8 billion pounds could be taken out as payday loans every year. There are dangers but why do people use them as much as they do, what alternatives are there? This article will investigate what alternatives to payday loans are available for everyday customers, such as not taking a payday loans, alternative sources of money, having a mini sale or finding alternatives on the high street such as credit unions. Reason for considering alternatives is the fact that payday loans are currently the most expensive form of lending and some customers do find it difficult to pay back, with certain payday loans going as high as APR 4670% (BBC,2014). Payday loans are viable option for many users, but be informed and take a reasonable decision.
Quick loans can become problematic and spiral out of control if you tend to use them excessively, meaning that as a user you would pay the APR 4670% far too often! How often should you need a payday loan? If you have to take money every month or use your overdraft, you might have to consider contacting the Citizen Advice Bureau or debt charities. Payday loans are flexible and good for giving you options, you could get money very easily but should you consider doing things differently, so your money fit your lifestyle?
How important are important things? Payday loans tend to be used excessively over the Christmas period, which means that people tend not to save up for the holidays but spare money from their budget after the holidays, plus the interest. Before you consider a payday loan you should ask yourself if the money is really necessary. You could always wait for a week or a month or for next payday, not having to repay a debt with high interest. Always try to save up and try not to use loans as emergency credit.
When the last time you looked what was is in the loft? What about a clear-out? Sell what you do not need or have not used in a while! A small garage sale or auctions on eBay will generate money for you and might even make more than you thought. An old bicycle could generate the money you need and you could make more room in your garden shed.
Having the economic climate in mind, it is not surprising credit use is on the increase. Could you spend less in your everyday life and make a difference to your monthly budget? Consider having one less coffee in a week, and packing a lunch twice a week. How much could you save? You could be surprised how little thing could make a big difference at the end of the month.
Should you take a credit, some lenders could make a good offer. An interest-free credit could come from a friend or a member of your family, have you ever asked? Instead of paying off interest, take them out for lunch or a coffee or just do a nice day out! What could be better than spending more time with the ones who care?
The high street does offer many alternatives, payday cash shops are not the only option. Credit unions, bank societies and your employer might be able to give you a credit. If your bank does not want to offer you any cash assistance you might be able to find short-term alternatives. Make sure you do a proper research and find the credit that fits your needs perfectly; the most obvious choices are likely to be the least favorable for the user.
Many people prefer using credit cards instead of payday loans. A comparison made by Which.co.uk for everyday credit cards shows that you could be able to get cards with APR as little as 6.9% to high as 12.9%, which is much better than 4670% APR /flexible or variable/. Certain banks or companies could even offer APR 0%, make sure you check you eligibility. Credit card might be exactly what you need if you have to take credit few times a year.
Having considered some good alternatives, we find that payday loans are not the only thing on the market. BBC found that in 2009 1.2 million people used loans, which is a big part of our society but not the vast majority. Many people find alternatives or simply cut back as everyone waits for the economy to get back in gear, but needless to say, not too many people live off credit. Of you should take a loan, make sure you consider your options carefully and make a reasonable decision.