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Last Updated on April 20th, 2023 at 11:08 am

There are several alternatives to payday loans that you should also consider when looking to borrow money. Make sure that you have considered alternative options, as payday loans are not always right for everyone. They can come with high interest rates, especially if you have bad credit. 

It is always best to first discuss any other options you might have to source the cash necessary to help you through your financial difficulty. In this guide, we’ll give you some ideas of where you can find the cash you need to get by; ideas  that can act as alternatives to payday loans.


Payday Loan Alternative #1: Ask for An Advance on Wages

If you find yourself in need of cash quickly, but your salary day still feels far away, you could consider asking for a pay advance. It is always worth asking if your employer is willing to give you an advance on your wages. If you have been a reliable employee, your employer may be happy to provide you with an advance to help you in a one-off emergency situation. This would be ideal in helping you through when an unforeseen expense comes along.


Payday Loan Alternative #2: Use Your Savings 

Although not everyone is able to build up savings, if you do have them then it might be worth digging into them when an emergency financial situation does occur. You are likely to pay far more in interest on a loan than you would ever earn in interest on your savings. Therefore spending your savings is almost always going to be a cheaper option than borrowing money, particularly if this comes in the form of a payday loan.


Alternatives To A Payday Loan


Payday Loan Alternative #3: Look into Personal Loans 

Personal loans are considered to be a good alternative to a payday loan. They are generally for larger amounts and have a far longer repayment term than a payday loan (usually 2 years and up). While the loan term is usually much longer, the interest rates tend to be much lower, at around 2-10% APR compared to the much higher rates that are usually given on a payday loan. Personal loans also tend to be far more flexible. For example you can usually repay a personal loan early without incurring a penalty.


Payday Loan Alternative #4: Use a Credit Card

If you have a credit card, this could be used for emergency purchases until you can pay off the bill on payday. A credit card may be enough to avoid getting a payday loan. However, it is still worth being wary when making purchases or withdrawals on a credit card as they can be expensive. 

Repay as much as you can, as soon as you can, to keep costs down. Don’t be tempted to make purchases that are not absolutely essential, and only spend what you can comfortably afford to repay. 


Payday Loan Alternative #5: Borrow From Family or Friends

If you have an emergency financial situation, borrowing the necessary funds from family and friends may be an ideal solution. Although this does come with a few caveats.

 It may be tempting to ask friends to lend you money to avoid interest or fees, but you still need to think carefully about whether you are, or will be, in a position to repay the loan. You should also consider the consequences if you are unable to repay the funds. When you borrow from a family or friend, the relationship may be damaged if you do not refund the money in a timely fashion.

If you do choose to borrow from a family or friend, be sure to draw up a budget to work up how much you can feasibly repay and over what duration. Look at your current salary and living expenses to work out an affordable payment plan that suits both parties.


Payday Loan Alternative #6: Use an Authorized Overdraft

If you have a current account, you may be able to access an authorized overdraft from your bank. There are some interest-free overdrafts, but others can be expensive. However, going into an authorized overdraft will usually be cheaper than using a payday loan. 

Ensure that you stay within the overdraft limit as slipping into an unauthorized overdraft can be very expensive and lead to severe money difficulties.


A payday loan has several advantages and may look like the ideal solution to your money difficulties. However, you should seriously consider whether you have any other way to resolve your circumstances, as payday loans do come with their own difficulties. We all want the confidence of knowing that we are making a wise financial choice. If you are unsure whether a payday loan is the best solution to your current difficulty,  read our guide: Is a payday loan right for me?

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Katie Fisher

Katie Fisher studied English Literature before working in consumer finance as a research and content writer. She was one of the first members to join the Pheabs family and has developed a following for her writing, especially surrounding high cost loans and increasing transparency. You can follow her here on Linkedin.