Borrowing money online can sometimes be an excellent option for same-day or quick cash in emergencies.
However, it is important to first consider the alternatives to borrowing money online so that you understand the choice you are making and have made sure it is the right choice for your circumstances.
There are a few alternatives to borrowing money online whether that be in the form of a payday loan or a longer term secured loan. Always make sure that any company or business you seek to borrow money from is authorised by the Financial Conduct Authority in the UK.
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Borrowing from family or friends
Borrowing the money that you need from family and friends could be a great solution for your financial problems.
Someone close to you can give you the funds that you need without interest and therefore you will not have to incur the high costs of a payday loan or other types of borrowing online.
There are, however, downsides to borrowing money from family and friends and you have to make sure that you will be able to pay your relative or friend back by the time you have agreed.
Although borrowing from the people you know best may seem like a viable and preferred alternative to the likes of payday loans online, it does come with potential drawbacks and considerations you should make before borrowing any money.
It is possible to severely damage relationships because of money, especially if you do not return the money for a long period of time.
Pros of borrowing money from family and friends:
- Avoid interest charges and fees
- No credit checks
- No risk to your credit score
Cons of borrowing from family and friends:
- You can damage relationships
- It can negatively affect your family or friends if you are unable to repay.
- It may be uncomfortable to be in debt to people close to you.
If you do end up deciding to borrow from family and friends then it is worth looking into getting a formal contract signed even if you trust each other.
This adds a level of surety to the situation and means that one party will not be confused or misunderstand the deal that is being made.
A spokesperson from GlobMed commented: “borrowing money from family and friends is something that should be done with careful consideration. You should always look at whether you can find the money from somewhere yourself before committing to a loan agreement with family or friends. That said, if for example you need help with a medical bill or expense that is more pressing, turning to family and friends may be worthwhile, but always consider things on a case by case basis.”
Getting a new credit card or using an old credit card is another option that might be able to help you with your financial situation.
Using a credit card and going into an authorised overdraft or simply paying back your credit card loan at the end of the month might be a better option than borrowing money online.
With a credit card you may be able to avoid taking out a short term loan and make the necessary purchases with your credit card.
This means you will avoid the higher interest rates and added debt of borrowing money online.
However, it is important to remember that credit cards also can be extremely expensive and can carry annual fees and high interest rates.
You will have to pay back everything on the credit card so do not spend money that you do not have and try to pay off your debt as soon as possible to keep the fees away.
Pros of using a Credit Card
- They are a convenient form of credit
- Cards can include reward points and perks
- They can be a great way to build a good credit score.
- Lower APR
Cons of using a Credit Card
- They can be expensive and sometimes have annual fees
- Applying for too many credit cards can damage your credit rating.
- It’s easy to dig yourself into a hole by overspending.