If you need a quick financial fix to help you pay for the essentials or cover emergency expenses such as a broken down car or a faulty washing machine, your instant reaction might be to try to secure a personal loan. However, there are many different credit options available that may be a better fit for your needs. Yes, quick loans are fast and convenient, but you should always consider your options carefully before you apply.
Online quick credit provider Wonga recently went on record to state that while there are benefits to having access to online quick loans, there are several associated risks with this type of credit that often outweigh the advantages. They recommend that alternative sources of credit be researched before committing to this type of loan. So before you commit to a typical quick loan we suggest you read on and consider these alternatives that may make more sense for your situation.
Interest-free credit card deals
Credit cards tend to be quite an expensive form of credit and are often a source of troublesome debt. However, if you’re clever about it, you can make them work for you. If you have a good credit score, credit card providers will usually give you 0% on your purchases for a set period, typically a month. That means you can effectively borrow the money for free, as long as you pay it back before the interest-free period expires.
Credit unions
Credit unions are not-for-profit organisations that offer loans at more competitive rates than banks, building societies and online lenders. While the affordability of credit unions is a real benefit, there are likely to be certain criteria you have to meet before you can apply, such as being a member of a specific organisation or holding an account for a qualifying period.
Pre-arranged overdrafts
Overdraft fees are certainly not cheap and they have rightly attracted the interest of financial regulators in recent times. However, it is possible to contact your bank to arrange an overdraft at a pre-agreed rate and even get an overdraft up to a certain amount for free. While the limits on free overdrafts are usually quite low, higher limits may be available at reasonable interest rates as long as you contact your provider beforehand.
Ask family and friends for help
Asking to borrow money from family and friends can be an awkward conversation to have and something most people would probably rather avoid. However, it’s often the case that your loved ones are only too happy to help. As long as you borrow an amount you can comfortably afford to repay and make sure you repay it as quickly as you can, there shouldn’t be any problems. You should always put the terms of the loan down in writing and there are lots of free loan agreement templates you can use. Here’s one example you can use to get started.
Talk to your mortgage provider
Your mortgage, if you have one, can be a potential source of credit that many people overlook. If you have overpaid your mortgage at any point, it’s worth contacting the lender to see if you could skip your next couple of mortgage repayments up to the value of your overpayment. Equally, many mortgage providers are willing to offer mortgage holidays, which could free up the money you need without using a loan. Alternatively, if you want to borrow a larger sum, you could even remortgage to release some of the equity tied up in your home.
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