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Payday Loans Alternatives

Payday loans are generally a very expensive way of borrowing money. Making sure you've looked at all the alternatives before you go ahead with a loan can be a very good idea.

Other kinds of Loans

You may want to first look at other kinds of loans. Most other loans will have much lower interest rates than payday loans.

Personal loans offer smaller amounts, usually starting at £1000 and can be paid back over a longer period of time than payday loans. Interest rates start from below 10% APR and many loans can be quick to arrange. These kinds of loans do, though, for the most part require a reasonable credit history.

For homeowners, secured loans can be easier to obtain even with poor credit. However, these are usually for larger loan amounts and can take longer to arrange.

Credit Cards

If you don't want to take out a longer term loan, you may want to look to your credit cards as an alternative to payday loans. If you need the extra money to make a purchase then using your credit card may seem like the obvious solution. Most cards, though, also allow you to withdraw cash on the card.

While interest rates on credit card cash advances are generally fairly high, they are usually much lower than you would pay for a payday loan. However, with a credit card it can be tempting to borrow more and more. It can also take a long time to pay back if you are only paying your minimum payment each month and interest charges can build up during this time.

With a payday loan you are usually paying the loan back after just one month. While the fee translates to a very high interest rate for such a short term loan it could work out to be less in monetary terms than taking a long time to pay back a loan for the same amount on a credit card. Even though interest rates are much lower on the credit card the amount you are paying adds up from month to month.