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What are the Alternatives to Short-Term Pay Day Loans?

06.07.2019 by Jack H

Why payday loans are bad 1000x

Bills and unexpected costs don’t care what day of the month it is. They don’t care if you’re days or weeks away from your next payday. They come as they please and in many cases, they kick us when we’re already down when we do.

The obvious solution to such a problem is with a short-term payday loan. After all, you’re just getting an advance on your paycheck. You’ll have the money to return it in just a few days. Surely it’s a better choice than, say, taking out a traditional loan?

Short term payday loans incur a high-interest rate. What this means is that you pay far more than what you take out. They do this to recoup costs from people who default, and of course to make their business profitable. It is in no way done to help you. While one payday loan might not hurt, making a habit of it will.

Payday loans are not the only answer, and this simple guide will explain why and, more importantly, help you understand what your alternatives are:

The Problem with Pay Day Loans

Payday loans are very easy to sign up to, but they are not your friend. They are unreasonably expensive for what they are, and if you cannot afford to pay them back, then you can suffer penalties, and your credit score can suffer.

To explain why this happens consider this.

You take out your paycheck from a payday lender.

There is interest on this loan.

You get your paycheck and go to pay back the loan, but now you owe money on top of what you’ve made. In short, you need to then spend money you may not have to clear your debts.

If you make a habit of this, your credit score can suffer, and your debts can increase.

When You Should Never Take Out a Pay Day Loan

Payday loans are for emergencies only, which is why you should never take one out for any of these reasons:

  1. For Bills
  2. For Rent or Mortgage
  3. To Pay Off Another Debt
  4. When Treating Yourself

If you cannot make these payments on your own, then it is best to speak to a debt advisor so that you can enjoy a better repayment plan. If you are not struggling due to existing debts, then it is important to work out your budget and start to save more. Struggling to save as much as possible for a few months is better than being faced with an unexpected cost or bill and having no savings to cover it.

The Top Alternatives to Short-Term Pay Day Loans

There are so many alternatives to payday loans as well, that you don’t need to resort to such extortive measures. Here is a list of some great alternatives to short-term payday loans:

Take out a Loan On Your Car

Vehicle Equity Release loans are the general term for what’s often referred to as Logbook Loans. If you own your car, then you can use it to take out a great loan. The best part is that you can continue to use and keep your car during the loan. How it works is simple; you simply put up your car as collateral. If you default on your loan, and only then, will the car be taken from you. So long as you keep up repayments, you will keep your car and have the money you need to cover unexpected costs and help you beef up your emergency fund. Logbook loans are a little old fashioned and not subject to the same consumer protection as the new alternative to a logbook loan which is Vehicle Equity Release using an HP agreement.

If the unexpected cost in question would easily be covered with the next paycheck talk to your employer. You should be able to get either an advance on your paycheck or get paid for what you have worked up until that point. Most employers don’t want their employees at work worrying about debt or being chased by debt collectors, so they should be willing to help you out in this way.

Work out Alternative Debt Repayment Days

Another alternative is to work out repayment days. If you are struggling because of a loan, you can always contact the agency. If you are bad at managing money, for example, and the debt repayment goes out just before your next paycheck they should have no problems with moving the collection date by a few days.

Borrow from Friends or Family

Borrowing from friends and family can and is a sore subject. You don’t want to admit that you need help, and the lax arrangements can mean trouble down the line. If you do ask for help and take money from them, make sure that you create a written agreement. This is to protect them and make them feel more comfortable with lending you their money.

You will also want to create a repayment plan from the start, and even include in your written agreement what they can take as collateral if you don’t make your payments or default for three or so months or more.

As it is in writing, you are legally bound by this agreement, which will give everyone more rights.

Credit Card Options (Even if You Have Poor Credit)

Another option is to pay for the unexpected cost with a credit card. Even credit cards that are given to those with poor credit are more economical than payday advance loans. Just make sure that you pay back your credit company regularly because there is no one more experienced at collecting debt that a credit card company.

How to Manage your Money Better

The best alternative, of course, to taking out a short-term payday loan is to simply manage your money better so that your paycheck can leave you enough left over at the end of the month to put into savings. In some cases, you might need to take drastic measures, including moving out of your apartment. You can then move back in with your parents while you save or find a cheaper option.

Other top ways to help you improve your money management so that you can avoid the payday loan altogether include:

Work with an Advisor

If you are dealing with debt, and that is why you are having a hard time making it from paycheck to paycheck without taking out a loan, then the first step you need to take is to find a debt advisor. Some of these advisors are free to use upfront, which makes them a great place to turn to for professional advice.

Create a Budget

The first step is to create a new budget for yourself. If you have previously found that you needed to go to payday loan after payday loan, then how you are currently spending your money at the moment is not sustainable. Be prepared to make some drastic changes, like how often you go out or even where you live so that you can finally start living within your means.

Get an Accountant for Taxes

Chances are you are paying more tax than you should be, so if you need more money to yourself hire a tax accountant or invest in a self-assessment program that can help you make the tax claims that you deserve.

See What Support Is Available to You

In some cases, there might be government aid to help you. If you have a disability, for example, or if you have reached a certain income that is low enough to warrant government intervention.

What you Should Never Do

When looking for alternatives to short-term payday loans you have a variety of options. When choosing one you will want to remember to never put yourself into further debt in the process.

Go into Debt

The point of these alternatives is to help you get the money you need without tying you to a system of debt. If you need help with your debts at any time, find a financial advisor to help you work out how to make a reasonable repayment plan.

Run from Your Debts

Never, ever run from your debts. Creditors can be lenient if you work with them, because if they have to sell off your debt to a debt agency, they will make a loss on you. On the other hand, if you are chased down by debt companies that black mark can remain on your credit score for years, especially if you have to file for bankruptcy.


Payday loans are not the answer, nor are they your only option. With a payday loan, you can quickly end up in debt and with worse credit than you started out with. By opting into any of the options we have discussed in this article, you can minimize your debt and increase your budgeting options.

Whether you take out a loan from friends and family, or you use your vehicle as collateral in exchange for a low-interest rate, there are so many options to help keep you afloat until you can finally start saving a buffer budget to keep you going month after month.

No one deserves to live paycheck to paycheck, and an unexpected cost should never mean going into debt. By knowing and exploring your options, and asking for help, you can weather any storm.