What are the alternatives to payday loans for bad credit?
The financial climate has left a lot of ordinary working people with poor credit ratings, so-called ‘bad’ credit, and even with debt collection orders that they have no way of paying. Even without the lack of lending facilities for these people, the dramatic collapse of the banks has caused the average UK resident to distrust and even resent the banks for their behaviour. This has led to the rise of other lending companies, including the well-known payday lenders. Although payday loans are not always as bad as the media declares, there are still plenty of alternatives to taking out a loan with these companies, or with the banks. If you are looking for a fast alternative to the payday loan company, then you can still find help with money, with or without bad credit.
Borrowing on your credit card
Credit card alternatives
After the credit crunch, people are embarrassed about the way in which the banks and other secure lends behaved, and this includes the credit card companies. Borrowing against your credit card seems to take back to those times before the financial crisis, and can make people nervous. However, if you have a low rate of interest, you may find that you get a better deal with your credit card than with a payday loan. Even credit rebuilding cards, which usually charge a high rate of interest, will be better than taking out a payday loan with its very high rate of interest.
Guarantor loans with family and friends
If the problem which is holding you back is not being able to get enough credit to fund your loan, then you should try borrowing using the credit of family, friends or neighbours. Known as a guarantor loan, a person with good credit helps you to apply for the loan, reassuring the company that you can pay. You repay the loan, often over a period of more than one year, or the person who guarantees the loan will have to take on the debt. This can be a good way of getting money if you have a regular salary, but can place tension on your relationships if you do not manage to repay the loan.
Borrowing with a credit union loan
If you want a simple solution to your debt without having to go to a payday lender, then you may be able to borrow the money you need from a credit union. You may not have even thought about this kind of loan, but they can be a great way of dealing with emergency debts. They often have a reasonable rate of interest, and long borrowing periods of up to one year. There are over 400 credit unions in the UK, with more than £600 million on loan to their members. You can easily locate the nearest credit union to you using local directories. They will lend to people in the local area, or the same industry, with bad credit, low credit scores, and with a need for a loan of up to £1000.