Massive APR rates, as well as high charges, have given payday loans a bad press and rightly so. Penalties for defaulting, increasing debts by rolling-over loans to the next month, and lack of responsible lending, leave customers caught in a never-ending payday loan trap. When you need funds in an emergency though, and friends or family can’t help, it’s often necessary to borrow – but where from? You might want to consider a different type of bad credit loan.
These enable you to borrow up to £5000 without any credit checks, as long as you have someone willing to guarantee the loan. However, there are pitfalls with this. You could jeopardise your friendship or a family relationship if you cannot meet a payment, and even lose them their home. Only consider as a very last resort.
Banks will sometimes let you sign up for an authorised overdraft. If not, and you have a credit card, consider using this before taking out a payday loan. As long as you pay it off at the end of the month you will be paying less than on a payday loan APR.
Peer to Peer (P2P) Lending
A fresh approach to lending, P2P loans can offer short term funding for many purposes. The simple idea behind is to connect borrowers with lenders, and provide credit as well as savings income. Some P2P loan providers consider applicants with poor credit, so do your research first.