Alternatives to payday loans

So, Derbyshire Building Society have just launched an incredibly low personal loan product  5.5% APR Representative for loans of £7,500 to £14,999 for up to 5 years. If you "Only" want to borrow £5000 then the rate jumps to a still excellent 7.2%. By comparison Payday loan lenders are regularly seen advertising APR's that run into the 1000's. Of course the APR's are skewed by the short term nature of the loan and comparatively processing costs also have a greater impact but none the less here you have the two ends of the personal loan spectrum. 

In between these poles is a broad range of lenders that will advance anything from £500 to £50,000 on an unsecured basis subject to your credit profile and affordability measuring up. Now, not everyone will be eligible for a loan at 5.5% because to be frank this will only be available to customers with an excellent credit profile, stable employment and fully traceable residency history. It's fair to say as well that many customers are only looking to borrow lesser sums and simply don't want £7,500. There are still though plenty of other lenders whose rates for example start at 12.9% for borrowings of at least £2000 that are worth considering.

If you can get a loan from your own bank then my advice as a broker is often to take it. We can offer a competitive rate of 7.9% for unsecured homeowner loans over £5000 but quite often your own bank or one of the major high street lenders will do a better deal on larger loans assuming again that your have good credit history.

The options for tenants or those with a weaker or bad credit profile become more limited. Guarantor loans though expensive at circa 50% APR are still a snip if you have run up and rolled over a couple of payday loans at 2000%. So long as you have someone who trusts you to repay the loan and is happy therefore to stand guarantor then you can borrow form £500 to £7500 if required.  

Ultimately you want to try and get the best rate you can and the most manageable monthly payment - so shop around, use a broker (ideally one not charging up front fees) like moneysolutionsuk and think before you apply.