Yes, there are some alternatives that you can explore before applying for a payday loan. However, if you are in need of a small loan – and that too,
quite urgently – payday loans can be an option worth exploring.
What is the easiest alternative to payday loans?
The easiest alternative to payday loans is borrowing money from your friends and family. You can also request your employer for a cash advance ahead of the payday.
Do banks offer any alternatives to payday loans?
There are a few ways in which you can use banking services associated with your bank account to access extra credit relatively quickly.
- You can request your bank to issue an advance overdraft/extension overdraft. An advance overdraft is issued against your available account credit – just like a
credit card does. If your available credit limit doesn’t cover your present requirements, you can request your bank to temporarily (maximum of 30 days) increase
your credit limit. It must be remembered that most banks don’t issue more than three advance overdrafts per year.
- If it helps your cause, you can request your payees to accept post-dated cheques. You can then manage your funds to ensure that the cheque will be honoured
on a given encashment date. Many small businesses use this method to stay afloat in cashless periods.
How can credit cards be used as alternatives to payday loans?
If you are thinking of getting a payday loan, it’s highly likely that you have exhausted your available credit.
In that case, the best you can do is to request your credit card provider/bank to temporarily increase your credit limit. If that works out,
you will end up paying lower interest than a payday loan.
Can I use my Centrelink account to draw some early credit as an alternative to payday loans?
Yes, you can. Most Centrelink benefits do allow for an early drawing of credit before the payday, provided that you have a healthy enough credit score against your name.
What other alternatives do I have?
Other alternatives include:
- You can apply for a Social Fund loan against your bank account/assets. Most Social Fund loans are interest free and are easier to manage. However, just
like bank loans, Social Fund loans take time to get processed.
- You can apply for a low-interest loan from local Credit Unions. These work just like banks, but on a much smaller scale. Credit Union loans are processed
relatively quickly, too.