So you’re in a bit of a rut and need some cash to get out – it’s happened to everyone.
Even those with the highest degree of restraint in managing money have found themselves short of cash at some point or another.
The best and probably cheapest place to get some quick cash when you need it the most is from family and friends. They’re likely to be quite understanding and, even though you may feel a bit awkward about asking them, once you’ve repaid the money you’ll find that it may even strengthen your relationship.
If borrowing from family or friends isn’t an option for you and a bank loan or overdraft request will simply take too long – you’ll have to consider one or another alternative micro lenders offering an instant, short term cash loan.
The sooner you need the money, the more it will cost you.
Think of it the way you would about any service – you generally pay more for a “rush rate” then if you’d accept the normal time frame for the service. With an instant cash loan you’ll have to repay the money in addition to quite a hefty interest fee.
A payday loan is an instant cash advance on your salary
It’s an unsecured loan that requires no credit search or only a “soft search”, which doesn’t show up on your credit report. This makes a payday loan one of the only solutions for people with bad credit or lack any significant history to prove to traditional lenders they’re reliable enough to pay back a loan.
Although interest rates are high the whole application process can be done online and some lenders will credit the money within just 15 minutes – making it a very popular option.
They’ve actually become so popular that most people use mobile phones to complete the online loan application.
Payday loans are mostly used for cash emergencies
Payday loans are also know as crisis or emergency loans – because they’re not a long term solution for cash flow problems – they’re merely a short term solution for a short term cash flow problem.
The requirements for taking out a payday loan are not strict – you merely need to be 18 years of age, be a UK resident and prove that you have some form of steady monthly income.
Make sure to compare the APR of a few micro lenders, only borrow exactly the amount you need and pay it back exactly as agreed.
Taking out a payday loan is definitely one of the fastest ways of getting some cash flow going but it’s certainly not the only option available.
Alternatives to a payday loan
As an alternative to a payday loan you could sell some items you no longer use or want for some instant cash. If you have gold jewellery or an electronic item you no longer use – then why not sell it to avoid the fees and interest you’ll incur from taking out a loan? It may take a little more effort than making a call or filling out an online application form – but that little bit of time will certainly be worth it.
Use your credit card
Using your credit card may be one of the easiest ways to get money fast. If you’ve reached your credit limit then you will have to request an overdraft because if you don’t you’ll end up paying some hefty unauthorised overdraft fees in addition to a higher interest rate. Requesting the overdraft will reduce the fees and interest rate so it’s important to contact your card provider.
You will also be charged transaction fees if you withdraw the money, whether it was authorised or not. To request an overdraft you can simply call your bank or walk into a branch and they’ll tell you whether they can authorise it or not almost immediately.
The problem with overdrafts is that they’re usually very limited. An unauthorised overdraft may only give you access to £100 while an authorised one will give you about £300.
If you’re in the habit of running into overdrafts you may want to consider changing your account to one which allows overdrafts free of both fees and interest. If you’re happy with your current account but also tend to go over your set credit limit you could contact your bank and request that the overdraft or limit be extended.
Try using a pawnbroker
Pawnbrokers are another option that can get cash fast and requires no credit check. In exchange for a loan you put up, or pawn, an item (or more) in equal or more value to the loan. Antique items and jewellery are usually the most common type of items pawned but you can simply inquire with the various pawnbrokers if you’d like to put up something less common yet valuable. If you repay the loan with interest as agreed you will receive your valuables back, if not they will be sold to recover the money. You will be issued with a receipt for the item; hang on to this because if you lose it you may not be able to reclaim it if the value if less than £75. If the item sells for more than you were loaned – you can receive the difference but pawnbrokers will never chase you to give it to you so you have to go and enquire about the sale.
The loan term will rarely ever exceed 36 months and you also usually get 2 weeks to back out of the loan – should you wish to do so.
To avoid any unexpected issues you should check to see if the pawnbroker is a member of the National Pawnbrokers Association as they have a code of conduct that requires members to conduct their business in an ethical manner. Although this may not save you from having an item undervalued, you’ll certainly have a better chance of doing something should things go sour.
The interesting fact that you may not be aware of is that pawnbrokers usually offer lower interests rates than payday lenders – so if you’ve got something to up as collateral for a loan and need same day cash – this may be your best option.
Instant loan from a traditional lender
Getting a short-term cash loan from a bank is definitely a better alternative than almost all options previously mentioned.
This is a perfect option for those who have a good credit history but if you’re struggling with bad credit and don’t meet the requirements as set out by your bank - then you will have to get a guarantor to help you.
A guarantor loan is where another person (that isn’t financially tied to you like a spouse) provides a guarantee that should you not make payments; they will do so on your behalf. You will still have to prove that you can afford to make the payments but a poor credit history will be, to a certain extent, overlooked.
Although this will certainly not give you access to instant cash – you may want to consider it as an alternative because it will work out a lot cheaper.
Keep in mind that the guarantor will have to undergo a credit check as well as supply proof of ID, proof of income and sign a contract.
Need more cash than you qualify for?
What should you do if you need more money than you can get from either a bank or a micro lender? Another option that relates closely to pawn brokering is logbook loaning.
This is where you put up your car as collateral for a loan. It’s very risky because you may lose your vehicle for a couple hundred pounds if you don’t repay the loan. Logbook lenders don’t generally allow you to borrow more than half of the value of your vehicle but this will still be a very high figure.
A logbook loan carries a very high interest rate.
Because of this, the cost of the loan may if taken out over the full term of 78 weeks possible for this type of loan, may cost you more than double the value of the loan in interest. Depending on the lender, you may have to repay the interest first and clear the loan in the last month by repaying the amount you actually borrowed and note some require weekly payments rather than one monthly repayment so you will need to keep track of what you’ve repaid carefully.
We recommend using a micro lender that is a member of the Consumer Credit Trade Association (CCTA) as they are bound by a certain code of conduct that may prevent them from mistreating you. This is the best option for those that need a large sum of money but have a few days to spare to because logbook lenders usually pay a loan out by cheque.
Wondering how this falls into the “instant cash” category? If you need instant cash you can request a cash advance however this will cost you up to 6% of the value of the loan.
Some additional options include asking for a cash advance from your employer, using some money from any savings you may have or getting a loan from a local credit union. You may also qualify for a Social Fund loan which like a credit union will offer a much lower interest rate than most other lenders.
So we’ve discussed ways of getting a cash loan almost instantly but there are a few ways that you can avoid running short of cash before the month is over.
Create & manage your budget
Budgeting – if you’re not already using a monthly budget to guide your spending this is as good a time as any. If you receive a stable monthly income then budgeting is a lot easier than for someone with a variable income.
There is a range of useful budget creating tools online that you can use for free. These will help you arrange all of your reoccurring monthly expenses as well as incorporate the variable expenses. Once you know how much you have to put aside for each expense you will then know exactly how much you have left over to allocate to non-essentials such as outings and more importantly, savings.
If you’re married and both have an income you have a much stronger budgeting and saving opportunities because you obviously have a larger combined income to work with. Sitting down with your spouse and working out how and when bills and expenses are going to be paid will also ensure you avoid running short of money before the end of the month arrives. You should pay all of your essential bills as soon as you receive your pay cheque – to ensure you pay them on time but also so that you develop a habit paying the important things first.
Your goal should be to learn how to live as far into the new month using last month’s salary – this will ensure you always have a little extra available to push you through an emergency without damaging your finances.
You will also get into the habit of spending consciously and not losing control of your money before the month is over.
Start an emergency fund
Start an emergency fund ahead of time, so should you ever run low on cash – you can simply use this money – interest and fee free.
You may be thinking that you can barely make it through the month so how are you ever going to put away any money to start up an emergency fund but there is certainly a few tips you can follow to get you started.
If you receive a pay increase from work, a bonus or inherit any money you can use it to jumpstart your emergency fund.
You could also find a part time job or request to work overtime to make some extra money to put towards an emergency fund. You could also have a garage sale or just pawn some things you no longer need or use to start the fund. You should always shop around for the best types of savings accounts available – one that offers a higher interest rate in addition to easy access to the money should you need it.
There is no use having an emergency fund if it will take you days – or even weeks to get the permission to use it. You will obviously need to replace this money at your earliest convenience but if you can’t replace it by the next month – you’re not going to have creditors breathing down your neck or charging you absorbent fees and interest for the delay so all your hard work and restraint would have been worth it.