There is little doubt that in an emergency, payday loans can be not only extremely useful but sometimes the only alternative.
However, most responsible people will normally try to avoid financial crises where at all possible and if you can, there may well be alternatives to the services offered by payday loan providers such as www.Wonga.com.
Let’s consider just a few here and review objectively their pros and cons versus the classic payday loan.
Short-term bank loans
These might be an alternative in situations where you don’t particularly need the money urgently. An obvious attraction is that the headline interest rates may appear to be very competitive.
However, although there is always the risk of generalising, broadly speaking banks are not always able to respond very quickly to loan requests – particularly those that involve relatively modest sums of money over short durations.
It’s also perhaps true to say that in order to get a fast (ish) advance from a bank, you may need to have been with them for some time and have an excellent transaction history.
Credit cards
These might, in certain situations, be very useful and if you have one, you clearly won’t need to make any applications to anyone for the funds you require.
On the downside, if you don’t have one then application periods may be extensive and you might only be successful if you have an exceptionally good credit history.
It also assumes that the purpose you need the money for can be dealt with through a credit card payment. If it can’t, you may need to make a cash withdrawal and the economics of that would need to be looked at very closely.
You can find out a little more about the technicalities of credit cards through the wiki page which is your best bet at impartial data without any bias or sales pitch, though be warned – it’s a slightly technical read!
Borrowing from friends and family
Clearly this is likely to be the most cost-effective source of funds.
Yet, it carries with it the disadvantage of needing to engage people close to you in your financial affairs – and that is not something that everyone would welcome. An article on the BBC reported that some £2,000 of every £13,000 owed by an average family, is owed to friends and family. You can read about it here.
Pawnbrokers
This approach to obtaining funds has received much publicity over recent years though today it may be known under many different names.
The basic approach is broadly familiar in that you will normally deposit a valuable with the company and they will lend you money up to a certain maximum percentage of its value. If you do not repay the money you have borrowed together with any appropriate fees and charges, your valuable may be seized and sold.
Borrowing money in this way does presume that you have a tangible and valuable asset available but it can also put at risk some of your most prized and perhaps sentimentally important possessions.
Summary
Most of us might agree that the ultimate solution is not to get in a position where you need money urgently and cannot meet the demand from your own financial resources.
However, in the real world, these problems do arise from time to time and in that context, responsibly used payday loans appear to be a reasonable solution when compared against some of the alternatives.