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Alternatives to Payday Loans: Exploring Other Options for Financial Assistance

Many of us will face financial struggles at some point in our lives, which is why it’s essential to know your options in terms of help when you need it most.  Payday loans online are some of the most popular types of loans used today and can help you manage an unexpected cost quickly and seamlessly. But there are alternatives that may be better suited to your requirements, which we will look at in more detail below. 

Payday Loans: How They Work 

You may have heard of payday loans, but how much do you really know about them? These loans – as the name suggests – are smaller sums of money that need to be paid back on the borrower’s next payday. They are used to help bridge gaps in income that may occur if you’re faced with an unprecedented expense, such as a broken boiler, or urgent home repair. These loans are typically offered by online lenders that base their decisions on affordability rather than  credit score, so even those with bad credit can benefit. 

Alternatives to Explore 

Whilst payday loans can be helpful when dealing with an unprecedented expense, they come with higher interest rates, and some may struggle to pay them off in the short time required. So with this in mind, let’s take a closer look at some alternatives to payday loans that you can explore. 

Personal Loans 

Personal loans are offered by traditional and online lenders, so there is a variety to choose from. Unlike payday loans, these loans come in all sizes, whether you’re looking for a small sum to tide you over, or you’re looking for a larger amount to pay for an important life event. These loans often come with lower interest rates and flexible repayment terms. Whilst this type of finance is preferable if you require a larger sum of money with lower interest rates, your credit score will have to be up to scratch to be approved. Eligibility requirements tend to be stricter and therefore may not be suitable for those with a bad credit score. 

Short-term Loans 

Short-term loans can also be used as an alternative to payday loans. Whilst payday loans require you to pay them back in as little as a month, short-term loans give you more scope for repayment – typically 6-9 months. These loans are also available to those with bad credit so you can benefit no matter how you’ve managed your finances in the past. If you’re looking for a loan to help you deal with an unexpected cost, but you’d prefer a slightly longer repayment term, looking into a short-term loan may be advantageous.  

Small Business Loans 

If you’re a business owner that is suddenly hit with an unexpected cost, cash flow is becoming tight, or you need to pay your bills whilst awaiting an invoice to be paid, a small business loan may be able to help. Whilst you could take out a personal payday loan to help you manage any issues, small business loans are there to help business owners in times of need, no matter the circumstances. There are a range of options to choose from, like  merchant cash advances, invoice financing, and term loans that may suit your needs. These loans may mean you may be able to incur less interest and still benefit from additional finance. 

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