Credit unions are non-profit community-based organisations. They can offer loans, savings and current accounts for their members’ benefit.
People pay into the union to save or to borrow money if they need to. The idea is to encourage people to take control of their money, save what they can and borrow only what you they can afford to repay.
A credit union can be a way to access credit if you’re likely to be declined by the bank. Most credit unions lend small loans of £50 to £3,000. You can search for your local credit union on the Association of British Credit Union’s website, or call 0800 015 3060.
If you’ve been on working age benefits for at least 26 weeks you may be able to get a budgeting loan to pay for essentials like rent, furniture or clothes. The smallest amount you can borrow is £100 and normally you’ll have two years to repay it.
The money is paid straight into your bank account and is interest free. How much you get depends on your circumstances.
You can apply for a budgeting loan if you live in England, Wales or Scotland (PDF) and Northern Ireland(PDF).
Rather than getting a payday loan it may be an option to ask the bank for a small bank overdraft. You’ll be charged interest on the amount you’ve borrowed until it’s repaid. There may be an administration charge, an arrangement fee, and monthly fees.
The overdraft can also be taken away at any time, so if you do have an overdraft it’s crucial for you think how you’re going to repay it, how much it’ll cost and be certain you won’t exceed the limit.
There are some companies who work with employers to offer advances on salaries, which can then be paid back at an agreed rate. In some cases there's no interest on the advance, but there may be fees for using the service.
These types of loans may be part of a wider range of employee welfare initiatives. Employers can advise if they're running one of these schemes and if you're eligible.
As with other forms of borrowing, it's important to consider if a salary advance is the right option for you. Employers should also consider whether a salary advance is in the employer's best interest, as this could be masking a wider problem.
If you’re regularly short of money borrowing more won’t help. We can provide free debt advice.
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