Unexpected expenses should not bother you if you have an emergency cushion. Experts suggest that you must have at least three months’ worth of living expenses. Unfortunately, it is not a cinch to be able to stash away this much money when on low wages. As a result, many people feel compelled to take out no guarantor loans from a direct lender.
Covering unforeseen expenses can be a serious challenge with low wages when you are already in debt. You will find yourself caught between the devil and the deep blue sea because if you pay for unexpected expenses, you will be left with little or no money to make debt payments, and if you prefer to make debt payments, you will have to borrow money to pay for emergencies.
If you already owe debt or your credit score is not stellar, you will have no choice other than taking out expensive loans from direct lenders in the UK with bad credit.
Ways to cover unexpected expenses until your next paycheque
There is no best way other than savings to meet unexpected expenses. They will preclude you from borrowing money. Savings are the cheapest source to fund your emergencies, but if you do not have enough savings, you can try the following ways to cover unexpected expenses until your next paycheque:
- Ask for a salary advance
If you have been working in your company for a long period of time, you might ask the HR department to give you a salary advance to help cover unexpected expenses. Inform them of your true financial condition. They might feel inclined to help you. However, the advance will be deducted from your next month’s salary. This option is suitable only when you are completely confident about your ability to cover all expenses from the deducted salary next month.
- Sell unwanted items
Look around your house, and you will likely find some items that must have seen better days. If you find old dishes and worn-out furniture or any other similar items, you should sell them. Though selling furniture cannot help you get a lot of money, it will likely be enough to cover at least emergency expenses.
- Communicate with your suppliers
If you have come across unexpectedly high utility bills, you should immediately contact your supplier. They might be able to extend interest-free payment plans. Try to compare prices with other suppliers, and if you find that your current supplier is more expensive than their counterparts, you should switch to another supplier. This will help you minimise your energy bills down the line.
Sometimes, energy suppliers fail to accept payments in instalments, but they might extend the due date to align it with your next paycheque without charging late fees. Explore all options and choose the one which is most suitable to your current needs.
- Borrow responsibly
Even though you have some savings, they might fall short of cash. In this situation, you will need to borrow money. It is important that you do not throw caution to the wind at the time of borrowing money. Short-term emergency loans are extremely convenience, but they come with exorbitant interest rates.
The APR of small emergency loans are very high. Be careful while calculating the total cost of the loan. You should try to borrow less money. There is no point in borrowing more than you need, as it will cost you additional interest.
Alternatives to loans from direct lenders
- Credit cards
If you find borrowing is beyond your affordability, consider other alternatives. For instance, credit cards could come in handy. They are ideal to make small purchases and cover small unexpected expenses.
You do not have to pay back money until the bill is generated. When the bill is generated, you will be given some period to clear the balance. You can avoid interest if you pay it back in full within the interest-free period.
- Credit unions
Another alternative is a credit union. In order to borrow money from it, you must be a member. Credit unions offer less expensive loans than lenders. However, you are still recommended to compare their interest rates with lenders. Choose the one that lends money at the most affordable rates.
Do not forget to concentrate on repayment terms as well. Direct lenders require a lump sum payment, but credit unions might ask you to pay money back in fixed instalments.
- Friends and family
If you need a paltry sum of money, you should first contact your friends and family. At the time of borrowing money from them, make sure that you will not struggle to keep up with payments. It is essential that you have an agreement in writing to avoid any kind of disagreement in the future. Friends and family do not charge interest, but you should still try to pay more than you borrowed.
- Consider budgeting loans
Budgeting loans are interest-free loans available from the government. They are aimed at those who are living on a shoestring budget. The best thing about them is that you do not have to pay interest on what you borrow. You are supposed to pay back only the borrowed amount in instalments. Payments are automatically deducted from your ongoing benefits. Before using budgeting loans, check whether you meet the eligibility criteria.
The bottom line
Covering unexpected bills could be extremely difficult if you have no savings at all. If you try to borrow money, it will put a heavy burden on your pocket. You will most likely struggle with payments, as small loans are discharged in one fell swoop.
You should instead try to borrow money from less expensive alternatives such as friends and family, credit cards and credit unions. Borrowing from credit unions is much cheaper than loans from direct lenders, considering interest rates and repayment terms.
Apart from that, you can sell unwanted items to make some money, ask your employer for a salary advance, and seek support from your creditors and suppliers.
