Alternatives to No Credit Check Payday Loans?

Money Issues, Debt Solutions & Debt Management Plans

Feb 8, 2009

Payday loans are a no credit check instant loan at a high APR. A debt solution, like a debt management plan or Individual Voluntary Arrangement, could solve money issues.

Millions are struggling with money issues. Desperation has led many people to turn to no credit check payday loans. Not only are payday loans high APR, they create further money issues as the interest paid reduces disposable income the month after. Those struggling with bad credit could borrow from friends or pursue a debt solution, such as a debt management plan or Individual Voluntary Arrangement.

Chris Tapp of the Donal MacIntyre programme stated that, "We would only ever want to see people using no credit check payday loans if they have a desperate, one off short-term need and there is absolutely no other option."

Avoid No Credit Check Payday Loans by Borrowing Money from Friends and Family

Paying in excess of 1000% APR on a no credit payday loan may help someone struggling to pay their rent. However, those struggling with money issues should always check to see if friends and family can help first. Loan deafult on a payday loan can prove extremely costly as the amount owned soon spirals out of control.

Negotiating Money Issues with a Debt Management Plan

A debt management plan is a voluntary agreement between a debtor and his creditors. It involves making a payment of at least £100 to an intermediary who, in turn, disseminates the proceeds to creditors on a pro rata basis.

Although a debt management plan doesn't write off debt, it can result in interest and further charges being frozen. It also normally means that creditor harassment comes to an end as an appointed account manager will deal directly with creditors to earn their fee for administrating the debt management plan.

Negotiating Money Issues with an Individual Voluntary Arrangement

Unlike a debt management plan, an Individual Voluntary Arrangement is a legally binding agreement with creditors. Once 75% of creditors, in terms of value, agree to an IVA there can be no further creditor harassment. The debtor will need to make 60 monthly payments to an Insolvency Practitioner. An IVA is only suitable for serious debts of over £15,000.

Once this has been done, the remaining unsecured personal debt is written off. An Individual Voluntary Arrangement allows a debtor to keep their own home and doesn't result in the insolvency being made public. It also shouldn't result in someone's professional status being adversely affected.

A payday loan provides a potential lifeline for someone struggling to pay the rent or mortgage, but has many perils. Check all other borrowing sources, such as family or friends, before opting for a payday loan. Those struggling with bad credit may be better advised to pursue a debt solution, such as a debt management plan or an Individual Voluntary Arrangement, rather than a Payday loan.

The copyright of the article Alternatives to No Credit Check Payday Loans? in Personal Loans is owned by Asa Ghaffar. Permission to republish Alternatives to No Credit Check Payday Loans? in print or online must be granted by the author in writing.