The average payday loan amount is £260. Thousands of people make use of the short-term credit industry to help cover unexpected costs and gaps in household finances every year. However, as giants like Wonga disappear, where can you go if you need a £250 loan and payday loans are not an option – or if you prefer to borrow differently?£250 cash loan

Sign up with a new, ethical lender

CreditSpring is currently offering up to two £250 loans every year to its customers, both of which are completely interest free. As long as the loans are repaid on time then there will be no interest to pay. If you want to have access to the lending facility then you need to be a member and that costs £6 a month. So, although the loans themselves are interest free, the total annual cost for accessing them would be £72. That could still be cheaper than some payday lenders charge in terms of interest and the monthly fee would also give you access to other membership services. You’d need to have a relatively clear credit history – definitely no CCJs or arrears, for example, – and an income of at least £20,000 in order to borrow. Plus, you’d need to have been a member for at least 14 days. Repayments on the interest free loan would be £62.50 a month.

Or can also use our payday loan comparison service to help you find the best cash deal.

Use an overdraft

An overdraft is basically a revolving credit facility. You’re given the freedom to use credit up to a certain amount and repay it, as and when you choose. Fees and interest on your overdraft will depend on which lender you bank with. A month’s worth of authorised overdraft borrowing could amount to anywhere between £3.70 with a Nationwide FlexAccount to £23.25 if you have a standard account with Barclays. If you don’t currently have an overdraft then you’d need to apply for one – you’re much more likely to be successful if you do this with a bank you have a history with. An unauthorised overdraft situation should be avoided at all costs, as you will always pay much more. Some banks charge up to £80 if you spend more than you have in your account without prior permission. The effective APR% of an unauthorised overdraft can be greater than a traditional payday loan!

Borrow from a credit union

The reason that credit unions are a good idea is that they are only allowed to charge interest of 3% a month. That’s an APR of 42.6%, as compared to payday loans, which can be up to 1,500%. The only downside of a credit union is that you need to be a member before you can apply to borrow. Some credit unions also require evidence of savings before they are willing to lend, which is something that many people who might have looked for a payday loan just won’t have. However, they are cheap – the interest over one month on a £250 loan could be as low as £4.65 (Leeds Credit Union).

Look at other lending options

Payday loans are not the only way to borrow quickly. Even if you don’t have a perfect credit score there are still other options available as an alternative to payday loans lending. Especially if you’re looking to borrow more than £250 then you may want to consider:

  • Doorstep loans – they sound old-fashioned but they have moved with the times. No bank account is required, and it is real cash that is brought to you at home.
  • Other online lenders – many new lenders are emerging to fill gaps left by payday lenders, many offering more medium term loans. Oakam, for example, will even lend to those on benefits or with CCJs.
  • Guarantor loans – ideal for anyone with credit history difficulties – a third person provides a guarantee to the lender so that if you’re not able to make the repayments on the loan that person will step in and do it for you. These loans are repaid over a minimum of 12 months.

Apply for a credit card

Although not strictly speaking a loan, credit cards do give you swift access to amounts of £250 and above that you can borrow for as short a period as you need. Finding the right deal is key for credit cards. If you need the money to make a purchase then find a deal that offers 0% on purchases for the first six months or more. That will give you six months to repay what you’ve borrowed without any interest charges – or you can just pay off the credit card next time you get paid as you would a payday loan. If you do choose a credit card, make sure you only request the credit limit that you actually need or you could find yourself with a much larger debt that takes a lot longer to pay off.

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