It is that time of the year again, where we all start to feel the pinch as the list of people to buy presents for over the Christmas season grows longer by the day, and ever more expensive. Buying presents is not the only Christmas expenditure though, of course, there is all the food (and the extra nibbles we really don’t need to buy) and drink that is needed for Christmas day and then enough to get you by for the rest of the holidays as you will feel lazy to move anywhere but a few metres from the house. Then, at some point over the festive season, you’ve also got to factor in costs for travel to see loved ones. We could go on.
Anyway, this can end up becoming extremely stressful, especially if you are struggling with money and are not sure how you are going to afford it all. You might be considering borrowing some money over the Christmas period, but aren’t sure what are the best options, and how you can do this sensibly without getting into more debt. Well, we’ve put together a few tips on the best ways to borrow.
Borrowing from family and friends
In certain respects, asking loved ones for help with money can be one of the trickiest things to do, especially so in the UK, when we tend to be very secretive by nature about our finances or salaries. However, if money is a problem this Christmas, it could well be one of the most sensible options available to you, as it is likely this loan will come with no interest added. If you are feeling very uncomfortable about asking, you could:
- Set up a repayment plan with your friend or family member, so there is a clear structure.
- Decide what will happen in the worst case scenarios i.e. if you can’t pay one month, or end up not paying at all for unforeseen reasons.
You could look at getting a loan from a credit union, where there is often no charges for early repayment, and interest rates tend to be fairly low. A credit union is non-for -profit, and to join you must meet eligibility criteria (often in the form of a ‘common bond’ such as trade union, industry or locality). Credit unions are regulated by the Financial Conduct Authority (FCA) too, meaning that they are covered by the Financial Services Compensation Scheme (FSCS) too. You can check eligibility criteria here.
Whilst certain credit unions allow applications from new members, many prefer that you have been with the credit union in question for a period of time before being allowed to borrow money.
Short term loans – emergency
It could also be worth considering looking at getting a short-term loan, even if you have a bad credit score. However, these shouldn’t be used just so you can spend more money on drinks or clothes. Use wisely, and only take out an amount which you know you can afford to pay back.