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Considering a payday loan? What are the alternatives

Payday loans can seem like an easy option if you have trouble borrowing money. But they can end up being very expensive in the long run.

Payday loans are likely to make things worse if you do not have enough money to get by.

Get free and impartial debt advice to find the best options for you.

What are the alternatives to payday loans?

There are several other options to look at before a payday loan. These include:

You could also look at:

  • Selling your unwanted items
  • Have a clear out and turn these into cash
  • Cutting back
  • Reducing spending might be enough to avoid the payday loan trap
  • Asking friends or family for help
  • A friends and family loan can be a better option
  • Make sure you understand all the risks first

Read more about saving money and increasing income.

Credit unions

Credit unions are non-profit community-based organisations. They offer members:

  • Loans
  • Savings
  • Current accounts

People pay into the union to save or to borrow money if they need to.

The idea is to help people:

  • Take control of their money
  • Save what they can
  • Borrow only what they can afford to repay

Most credit unions give small loans of £50 to £3,000.

Search for your local credit union by:

Budgeting loans

You may be able to get a budgeting loan if:

You can use this to pay for essentials like:

  • Rent
  • Furniture
  • Clothes

Here is how it works:

  • The smallest amount you can borrow is £100
  • How much you get depends on your circumstances
  • The money is paid straight into your account
  • It is interest free
  • You normally have two years to pay it back

Bank overdrafts

Ask your bank for a small bank overdraft.

Fees include:

  • Interest
  • This is charged until what you borrow is paid back
  • An administration charge
  • An arrangement fee
  • Monthly fees

Make sure you can pay back an overdraft before you set one up.

  • Understand the costs
  • Check you will not exceed the limit

Salary advances

Some companies work with employers to offer advances on salaries.

This is then be paid back at an agreed rate.

In some cases:

  • There is no interest on the advance
  • But there may be fees

Ask your employer:

  • If they run one of these schemes
  • Whether you are eligible

Like any loan, make sure a salary advance is the right option for you. Your employer should think about this too.

Online payday loan help

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Worried about money?

We can help. Use our free online debt advice tool.

Get help now

Do I need a payday loan?

Payday loans have very high interest rates.

Do not use one for:

  • Large expenses like:
  • A holiday
  • Home improvements
  • Christmas
  • Paying off existing debts

Create a budget to find other ways to pay for these.

How else can I boost my budget?

Other ways to boost your budget include: