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When an expense comes up unexpectedly, payday loans are a quick and convenient option. However, they are also very expensive with high-interest rates. This means really if you are looking for a way to get a hold of extra money fast, you should avoid payday loans or at least leave them as a last resort. Instead, there are five alternatives out there that you should think about applying for that we are going to discuss in the following post.
Borrow From Friends or Relatives
This is probably one of the hardest alternatives to payday loans in this guide. It can be daunting turning to your closest friends and relatives when you need financial help. If there is someone in your social circle that you could borrow some money from to pay an unexpected bill or for whatever reason, it could be the cheapest and less stressful option in the long run. Although this option carries the benefit of possibly not having to pay back the loan with interest, if anything goes wrong and you can't pay them back, you run the risk of ruining your friendship/relationship.
Make an Arrangement with Existing Creditors
Is part of your money problems the fact you have outstanding debts you are having difficulty paying back? You could contact your creditors directly and ask about a payment plan to reduce your monthly outgoings to that particular debt. You will find that the majority of companies and financial firms will appreciate you trying to work out a solution and will be willing to reduce the monthly payments if it means they are getting something rather than nothing at all.
Credit Union Personal Loans
Another alternative to payday loans is personal loans offered by credit unions. These tend to be more competitive and come with capped rates that are better than building societies and banks. The downside is that you may find it hard to have a loan for a large amount of money approved from a credit union.
There is also the fact that while there are at least one or two credit unions to cover most parts of the country, you may still be limited in the choices open to you.
Secured Homeowner Loans
Do you own your home? You could use the equity from your property as security to avail yourself of a large loan from a company. As a property is a high price asset, a loan that is secured on it is very low risk for a lender, which may mean you benefit from lower interest rates than other alternatives we have discussed. You need to think carefully before choosing this option because if you do not keep up with the repayment plan, you could lose your house.
Guarantor Loans
This is similar to an option we suggested further up the page, but a little more official. With what is known as a guarantor loan, a relative or friend gives a written pledge to step in and make the payments for you if you miss repayments. These are not especially cheap forms of loans, but the interest rates associated with them are still lower than what you get with payday loans.
For more information on payday loans and the various alternatives that could apply to your situation, check out Nowloan.