We appreciate that a payday loan is not for everyone and there may be other more suitable alternatives available. Whilst payday products should typically be used for unexpected or emergency expenses, we list some options below that may help you access money quickly and still work within your criteria and credit history.
Short term loans
Payday loans are traditionally taken out for a period of 2 to 4 weeks with the intention to repay at the end of the month, on your next pay date. At Uncle Buck, we understand how this can put pressure on your finances to pay for your emergency and still come up with the remaining funds at the instalment to repay the amount borrowed with interest.
We are pleased to offer more flexible loans which allow you to spread your repayments over a several instalments. If you find that you are in a healthy financial position to repay your loan earlier than the contractual end date, you may do so without incurring any additional costs and you could be eligible for a rebate of interest.
Borrowing from family and friends
This is a common form of borrowing in the UK and whilst this is commonly allocated for car purchases and mortgages, it can include asking your siblings or parents to borrow money for everyday things.
Especially if you have an emergency purpose like urgent home repairs or a medical bill, the people you know and love will want to try and support you and help you get back on your feet.
The benefit of borrowing from people that you know is that they may be more flexible when it comes to repayment – by not charging you any interest or giving you a fixed repayment date. For many friends and family, it is a matter of paying when I next see you or whenever the money becomes available. However getting into debt with a family member or friend and not repaying what you owe can put pressure on the relationship.
Money Advice Service explains, however, that it is good to have something in writing when lending to family members. A formal approach can show the terms of the loan, when you are going to repay and how much. This is sometimes used between parents and children as a way of putting some formalities in place and avoiding any future disagreements over money.
Cash advance from work
Some employers will have facilities in place that allow you to receive an advance on your regular salary. Some organisations will have procedures in place that give you this option or you can always ask your employer in person. This type of thing is perfectly acceptable for those needing extra money due to an emergency purposes or a lifestyle change such as having a baby or getting married.
Busy households accumulate so many items over the years including books, CDs, electronics, mobile phones and clothes and there are people out there who are willing to pay good money for them. In fact, you could be sitting on a small fortune.
Keeping with the theme of getting money fast, you can try setting up shop at your local car boot sale and you could earn a few hundred pounds in a morning, which is the equivalent of a payday loan product but without the interest to repay.
Mobile app Shpock is the equivalent of a car boot sale straight to your door. You can take photos of the things you want to sell and people can purchase them through the app and pick them up on the same day.
There are also several services online such as Money Magpie that allow you to sell mobile phones, CDs and video games and they will even send a courier to pick them up from you.
Credit unions emerged in the 1940s and were set up by people with a common bond such as a local community or church. There are currently 500 credit unions trading in the UK and as non-profit organisations, they offer loans with very low interest rates at a maximum of 3% per month or 42.6% per year.
You typically need to be a member of your local credit union to be eligible such as belonging to the local church, group or living within the community. You need to have a regular income stream and some require you to be working in the public sector such as a policeman, teacher or nurse.
Key features include:
- Borrow between £50 and £3,000
- Monthly repayments
- Up to 5 years for unsecured loans
- Up to 10 years for secured loans
Since credit unions operate as non-profit organisations, there are no late fees or additional interest for missing repayments – you simply pay the original amount stated in your agreement. Since they are not as savvy as banks and online lenders, it can take up to 7 days to receive the funds into your bank account if you are approved. Use this tool to find your nearest credit union.
This is a type of financial product typically used by those with less than perfect credit scores. This involves getting an additional person to co-sign the loan agreement with you and agree to be your guarantor. This is usually a parent, sibling, spouse or friend and they agree to cover any repayments in the event that you cannot.
From the lender’s perspective, they are looking for guarantors that have a good credit history and are ideally homeowners to show that they have some form of security behind them. By having a person with good credit to ‘back up’ the loan, the lender feels more confident that they can still recover their funds if the customer cannot repay on time.
Customers apply to borrow larger amounts of £500 to £15,000 and the loans are used for lifestyle purchases such as home improvements, new vehicles, education and weddings. The interest rates range from 39.9% to 49.9% APR and the loan term lasts from 1 to 7 years, with the option to repay early.
Peer to peer loans
The peer-to-peer lending industry is growing rapidly in the UK and is said to be worth around £7 billion.
This is a type of loan where you essentially borrow from other individuals in the UK. Investors will use peer to peer lenders as a way of receiving an interest rate that is usually higher than their local bank. The P2P lender will act as a middleman by taking this money and lending it out to other individuals who are looking for loans of up to £5,000, with rates of 3% (good credit) and 9.9% (bad credit).
For the person investing their money, they can choose their risk of whether to lend to good or bad credit customers, with bad credit offering higher returns on investment.
Beware bank overdrafts
If it is a few extra hundred pounds that you are looking for, the idea of using your bank overdraft as your credit card can be quite appealing. If you have agreed a borrowing facility with your bank beforehand, you may be eligible to borrow a few hundred pounds but at a cost.
Customers have to be aware of the high fees that can be charged so it’s important to understand the costs along with the bank’s terms and conditions. Even if a bank advertises “interest free overdrafts”, this may only apply to a certain amount borrowed. Whilst an authorised overdraft may yield rates of £10 to £30 for borrowing £100 over one month, the cost of using an unauthorised overdraft is significantly more.
By using an overdraft without the bank’s permission, you are still able to access funds but without additional affordability checks carried out by the bank – so essentially, they are lending more to you than previously agreed and therefore taking on more risk. As a result, the cost of using an unauthorised overdraft can cost as much as £90 per month (RBS) or even £100 by month (Halifax). (Source: This is Money)