By Cassandra This post may contain affiliate links.
Apologies that I’m talking about Christmas like this when we’re only halfway through October but I know that many of us are starting to think a little bit more about it now that the nights are drawing in. There are still 2-3 paydays left before Christmas then if you start now, you have plenty of time to plan which means you won’t need to have a panic right before Christmas and be tempted to turn to a payday loan company for help paying for the festive season.
Lots of us, regardless of how we manage our money through the year, can lose our heads a little bit at Christmas with all of the extra money that can be easy to spend. That, added to the fact that the wait until payday in January is longer than normal, means that many people will be looking for ways to afford the Christmas they want to have and then manage to get through the long weeks of January before payday.
I had a quick search online and came across some pretty scary facts about just how many people struggle at Christmas!
The average spend on Christmas was £397 per person.
Approximately 30% of people go into debt to pay for Christmas.
1.4 million people turned to payday loans to help pay for Christmas last year.
(The only figures I could find relate to Christmas 2014 but I can’t imagine last year was any better)
Even with the interest rate cap on payday loans being introduced, borrowing £100 over 14 days could still end up costing £115 to repay if you’re not careful and then there’s the problem of what you do if you can’t afford to pay it back. It can mount up very quickly and honestly, there are alternatives.
What are the alternatives to Pay Day loans?
The alternatives may not be ideal and they’re not long-term solutions but if you need money in the short term then there are other ways to go about it. Here are some alternatives to payday day loans that I’ve thought of….
Sell something
Shops like Cash Converters are there to buy your unwanted items and will give you cash in hand in less than 10 minutes. They buy all sorts so have a sort through your things and see what you can part with. There are shops that will buy your games and consoles from you and Facebook selling sites where people will buy the oddest things. You won’t get the best price but you will get cash that you won’t have to worry about paying back!
Make some money
The problem with making money is that it can often take time to be paid so most of the things I would usually suggest are no good here. Your best bet is to offer your services to friends and family – present wrapping, babysitting and anything else like that would definitely be something I’d be interested in at this time of year if my friends were to offer to do it for me. Even the odd bit of ironing or cleaning because I have so little time at the moment. Just update your Facebook status and see what happens.
Speak to your Bank
They might not be able to help but they might offer you a small overdraft which again, isn’t ideal but is better than a Payday loan! The charges on an authorised overdraft will be much less than the charges on a payday loan and you won’t have the stress of having to pay it back so quickly.
Consider cancelling any non-essential Direct Debits
Do you have any Direct Debits that are due to come out for anything non-essential that you can cancel? Just to clarify, I class essentialas being things like mortgage, utilities, mobile phone etc – anything that would affect your credit file or have a negative impact in some way if it wasn’s paid. Things like charitable donations or subscriptions can be cancelled if you’re desperate and will free up some extra money.
Consider borrowing from a credit union
Credit unions are non-profit organisations and their interest rates are much less than a payday loan so they’re definitely worth considering. I’m not sure how quick their process is but you can find your local credit union here.
Don’t be afraid to ask for help
Don’t take a payday loan to pay for food and essentials – speak to your local food bank who may be able to help you.
Also, don’t be afraid to ask close family if they can help you but do make sure you set up a repayment arrangement in writing so you both know where you are. Be aware that not paying them back when you say you will could seriously affect your relationship with them so make sure you stick to the agreed repayment schedule.
Be honest with yourself and other people
As difficult as it is, people will totally understand if you’re honest and say that you simply can’t afford gifts. Give them handmade gift certificates promising them things you know they’ll appreciate. If you always buy gifts then suggest a secret Santa so you just buy one gift and not one for everyone.
Please do remember that these ideas for alternatives to Pay Day loans aren’t long-term suggestions but they may be helpful if you do find yourself in the position where they feel a payday loan is your only option.
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Before taking out a high-cost payday loan, consider alternatives. Talk with your creditors to negotiate more time to pay bills.Borrow from family or friends.Shop for a credit offer with lower costs, like a low-rate credit card.
For repayment, you generally write a postdated check for the loan balance plus any applicable fees or authorize the payday lender to electronically withdraw the funds from your account. If you don't repay the loan on or before the due date, the lender can cash the check or withdraw the amount from your account.
Upstart has no minimum credit score to apply for a loan, which makes them a popular choice for borrowers of all categories. Those with lower credit scores or uneven credit history may receive offers with [high APRs]. Loan amounts range from $1,000 to $50,000 and loan term lengths available are three- or five-year.
Payday Loans Are Very Expensive – High interest credit cards might charge borrowers an APR of 28 to 36%, but the average payday loan's APR is commonly 398%. Payday Loans Are Financial Quicksand – Many borrowers are unable to repay the loan in the typical two-week repayment period.
If you go into default, you may lose your eligibility for deferment, forbearance and the repayment plans; your wages, tax refunds or federal benefits may be garnished; or your loan servicer could take you to court. Your credit score could also be negatively impacted.
If you're unable to repay your loan, the lender may charge you late fees or other penalties. The lender can send your debt to a collection agency or they may garnish your wages.
What Happens if You Don't Have Enough to Pay Back Your Cash Advance? If you don't have enough money in your linked bank account when Dave comes to collect, they'll take whatever is available and keep automatically withdrawing partial payments until the amount is settled.
The easiest types of loans to get approved for don't require a credit check and include payday loans, car title loans and pawnshop loans — but they're also highly predatory due to outrageously high interest rates and fees.
Hardship personal loans are a type of personal loan that is designed to help you overcome financial difficulties. This type of loan is generally offered by small banks and credit unions, and has lower interest rates, lower maximum loan amounts, and shorter repayment periods than standard personal loans.
What is the easiest type of installment loan to get? In general, the easiest type of installment loan to get will be a short-term personal loan that doesn't require a credit check, such as a payday loan, pawn shop loan or car title loan.
Payday loans can turn a short-term need for emergency cash into a long-term, unaffordable cycle of high-interest loans that you cannot repay. It is hard to both repay a payday loan and keep up with normal living expenses, so payday loans often force borrowers to take out another high-interest loan, over and over again.
Called the five Cs of credit, they include capacity, capital, conditions, character, and collateral. There is no regulatory standard that requires the use of the five Cs of credit, but the majority of lenders review most of this information prior to allowing a borrower to take on debt.
While payday loans are generally designed for low-credit borrowers, you may still have a difficult time getting one without a steady income. Many credible lenders will want to confirm your income to make sure that you have the ability to repay the loan before they issue one to you.
If you are considering an online payday loan, think about:
How much will it ultimately cost?
Can you repay or afford this loan?
How will you repay the loan? Online lenders may not take a check and may ask you to authorize taking an automatic electronic payment from your account.
Payday loans are typically used for nonnegotiable everyday expenses like your rent, utilities, and groceries. Because of the high cost of borrowing these loans, they shouldn't be considered for impulse or unnecessary purchases that you could hold off on, save up for, and purchase at a later date.
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