Avoid Payday Loans
- Payday loans are not a quick fix
- Loan costs can spiral
- Guarantor loans are more flexible and cost effective
A “challenging” credit score might make you think that your borrowing options are limited. Many people assume that bad credit loans mean payday loans. Although they can provide a great solution if you’re looking for credit, very short-term finance like this can also be difficult to manage and just isn’t appropriate for every situation. In fact, for many people, guarantor loans are simply better – here’s why:
Before we look at why guarantor loans are better than payday loans, it makes sense to summarise both:
A short-term option to borrow a relatively small amount of money to be paid back when you next receive your salary. You don’t have to have a perfect credit score. Lenders will be more focused on your current income and outgoings (re. budget affordability).
A flexible type of borrowing of up £15,000 over 1 to 5 years. The key feature of this financing is that you need a person with good credit to support your application. This will be someone who is close to you and who will step in and make repayments to the lender on your behalf if you’re not able to make them. Guarantors need to be at least 18 years old (21 in some cases) and will need to have a reasonable income, but don't have to own their home.
Although both of these options are often considered by anyone looking for bad credit finance, there are significant differences. Indeed they are solutions to different problems.
Whether you need money to pay for Christmas presents or an emergency, such as a broken boiler, often it’s payday loans that are identified as the quick way out of the situation. However, they are not for everyone and you might already be wondering how to avoid payday loans, based on other people’s experiences. Guarantor loans are processed online and can be fairly swift when it comes to receiving the money. In fact, you may have the cash in your account within just 24 hours, making it easy to cover the cost of whatever you need to pay for without delay. There are also a number of other reasons why guarantor loans are better than payday loans when you need money. Payday loans are a bad idea because:
It’s true that there are only a limited number of options for bad credit unsecured lending – and payday finance is one of the choices available. However, it doesn’t have much versatility - guarantor loans are better than payday loans for a number of reasons:
There are a lot of finance specialists, such as The Money Advice Service, who recommend avoiding payday loans. Despite the caps that have been introduced to fees and charges, they can still be tricky to repay and end up being very expensive. It’s easy to get into trouble with this type of short-term finance and, at that point, lenders often suggest a deferral or a new deal. Which can lead to even more problems. Although payday loans are small, they can have a big impact on your credit score. If you miss your payment, make it late or can’t make it at all then your credit score will suffer. You may even end up with a County Court Judgment (CCJ) against you.
Guarantor loans have many advantages over payday loans and none of the disadvantages. With longer repayment terms, they are much more affordable and easier to repay, meaning it’s much less likely that you’ll end up damaging your credit score. If you’re looking to borrow, whether it’s for an emergency or to finance a purchase up to £15,000, you will find it simple, fast and free to arrange a guarantor to help you do it.
When it comes to getting you your guarantor loan our online service is second to none. In fact Solution-Loans.co.uk has scored based on 198 ratings & 31 user reviews for its guarantor loans service.
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