Short-term loans can cause long-term problems. They may get you through to payday for the first month, but what happens the next month? You’re still likely to have the same ‘money gap’, with the added problem of having to also find the interest on the loan. So you have to take out another loan and so the cycle goes on.
The best option is to act early. As soon as you find yourself worrying about how to make ends meet, contact the National Debtline or your local Citizens Advice Bureau. They will talk you through your best options, which could include changes to your budget, re-negotiating existing loans or taking out a longer term loan from a lower cost provider.
If you look for debt advice online beware of commercial debt advice companies appearing to offer free advice.
StepChange Debt Charity may also be able to help. They offer payday loans advice and can also arrange a fee-free debt management plan if appropriate. For free debt advice, use their online help tool Debt Remedy - an anonymous, online debt counselling service.
If a loan is appropriate for you, a Credit Union is well worth considering. The Union is like a bank but is a co-operative owned by its members. Unlike banks, which make decisions based on impersonal computer credit checks, the Union makes decisions based on personal knowledge.
Members are also encouraged to start saving as they borrow, nurturing responsible personal financial management. The Boom! Credit Union covers the whole county (as well as Surrey and Kingston) but there are several smaller ones that cover local communities.