How To Ensure A Safer Loan Alternative

How To Ensure A Safer Loan Alternative

Life can sometimes be difficult to predict and there may come a time where you need to secure financial help to get by. Whether you need a payday loan to pay for emergency medical bills, a short term loan for unexpected car repairs, or an emergency loan to cover a temporary cash flow issue, there are many loan options available. However, loans are not the ideal choice for everyone, so in this post, we are going to detail how you can find a safer loan alternative.

The first step to take is to assess your situation and the reason why you would like to secure finances. It is key to understand what you need the money for, whether you are in a position to borrow money, and whether the expense is necessary. This will help you to understand whether you really need the extra cash at all. If you still feel like you are in a position where you require a financial product, here are some alternatives to consider.

1. Interest-Free Credit Cards

While many may disregard credit cards as a safe alternative to a loan, if you find the right deal and monitor your usage carefully, they can be ideal. Many credit card providers offer a 0% interest deal for a set period. This means that you can spend whatever you need and repay within this period to avoid any interest. Be mindful not to overspend or extend your repayments beyond the interest-free period.

2. Credit Unions

A credit union offers an alternative to traditional banks and building societies. They are usually small, non-profit financial organisations that provide a financial community, and offer savings and loans. You will need to apply to a credit union and become a member before you can borrow from them, but they act in the interest of their members, so they try to ensure their members do not take out more than they can afford.

3. Personal Borrowing

Instead of seeking help from a professional, financial establishment, try looking to your family and friends. Personal borrowing would involve asking a trusted friend or family member to lend you the money that you need. To make it official, you could write up a contract and agree to an interest rate if your chosen lender would like some extra security. Depending on how flexible they are, you may be able to save on interest and agree a repayment term that suits you.

4. Overdrafts

Many banks offer an overdraft on their current accounts, but you will need to speak to your bank first before going into the red. Some banks also offer interest-free authorised overdrafts, so they can be an option if you needed a way to save a little bit of money. Even if your bank does not offer an interest-free overdraft, it may still have far lower charges than an unauthorised overdraft.

Before turning to loans or finance options, these alternatives should be considered first. Each can help you to avoid further debt if treated carefully, and even save you money. If you need any further help, please seek impartial support from the Money Advice Service.