Ethical payday loan alternative

If you need money fast, a payday loan may seem like your best option. It’s convenient and easy to set up, so what’s the harm? Payday loans, as simple as they may seem, are a quick fix that can lead to even more money problems.

Failure to pay back a payday loan can not only negatively affect your credit rating, it can leave you in a downwards debt spiral. As expensive as they are risky, payday loans are often more of an issue than they are an answer. Fortunately, we offer an alternative to payday loans.

What is a payday loan?

In simple terms, a payday loan is a short term unsecured loan designed to see the borrower through, financially, until payday. Typically they are high cost and offer small sums of money, from £50 to £1,000, with a high-interest credit based on your income. These small loans/payday advances are made to cover unexpected expenses and immediate cash needs. Payment is usually taken by the lender on payday, with some lenders offering flexibility on dates.

Why might I feel I need a payday loan?

Payday loans cater to both everyday essential needs and non-essential spending. If you are in a tight financial spot, say you may have an unexpected bill or experience a sudden redundancy, a payday loan offers to tide you over until your next payment.

There are many reasons why people may seek out a payday loan; it could be a medical emergency, to pay an overdraft, for a holiday or debt consolidation or even just to avoid an embarrassing situation. It’s very easy to find ourselves with unexpected expenses and no one is immune to financial troubles, which is why it’s important that financial lifelines exist.

If you need extra money in a hurry, payday loan appear to offer a quick-fix solution, but they are not necessarily the best solution. Borrowers who pursue payday loans can soon be in a worse financial position than they were when they started. Responsible alternatives to payday loans, like ours, can help keep you out of the cycle of debt.

Who can get a payday loan?

The appeal of payday loans for borrowers is that they are fairly simple to secure. Anyone over 18 can apply for a payday loan, however, the lower your credit score is the higher your interest fees will be. The average annual percentage interest rate can be as high as 1,500%. Some lenders will reject applications from those with ‘bad credit’ while others specialise in accepting bad credit borrowers.

What happens if I can't pay?

For most payday loans you are given a month to pay back the money you borrowed plus interest. Payments are taken by direct debit or continuous payment authority. It’s important that there are enough funds in your account on the date of repayment, otherwise, late fees will incur. Charges for missed payments can mount up quickly, trapping you in a cycle of debt. Failing to repay on time can not only be financially crippling; depending on the lender it can also have an overall negative effect on your credit rating.

Why is a payday loan a bad idea?

While payday loans should not negatively affect your credit if they are paid back on time, they should not be taken lightly. The high interest rates of payday loans mean they are high risk. If you are not confident that you will be able to repay the loan on the agreed date, then it is not recommended that you use payday loans.

• Payday loans are expensive in the short term with interest rates higher than other forms of credit
• Late repayments cause borrowers serious money problems in the long term
• They can be damaging to your credit score: certain lenders may refuse applications (e.g mortgages) of those who have used payday loans in the past
• Increased stress and financial burden

What is the alternative to payday loans?

Payday loans are an expensive and high-risk way to tackle temporary money problems. They are not suitable for sustained borrowing over long periods, and there are other affordable loans online that can help you to make ends meet.

We know that it is not always possible to defer an expenditure or tap into the bank of mum and dad. Loans can sometimes be your only option, but that shouldn’t mean that you have to settle for potentially financially crippling payday loans.

Scotcash are an ethical alternative to payday lenders, we offer affordable short term loans starting from just £100 right up to £2,000. We are here to help you when a bank or building society cannot. As a not for profit, social enterprise and a Community Interest Company (CIC) we provide affordable loans that are suitable for long term borrowing so you don’t have to worry about incurring more debt.

Why is Scotcash a beneficial alternative?

At Scotcash we provide a range of affordable loans, financial support and guidance. Unlike other lenders, all of our loans are means-tested and we only lend what we know you can afford. We offer cost-effective loans with a lower APR so you can make the most of your money.

We work with you to determine fixed regular repayments that better suit your financial situation. With options to pay weekly, fortnightly, four-weekly or monthly you are in complete control of your repayments.

All Scotcash loans are repaid through Direct Debit with your bank, so you don’t have to worry about home visits or having cash on hand. If you don't have a bank account we can even open a basic bank account for you. We work in partnership with Royal Bank of Scotland, Bank of Scotland and Barclays to provide you with the best deal.

With friendly staff, lower interest rates and easy and flexible repayments we work hard to provide approachable secure financial support for all those who need it.

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