Student loans are some of the most reasonable debt out there. They are low cost (in fact, some people have ended up with next to no interest on them) and they don’t need to be repaid until you are earning above a particular threshold. If you reach a minimum age without achieving that threshold, they may be cancelled completely. The system is currently going through changes, so it’s worth keeping your eye on the ball, but all in all, as debt goes, such loans aren’t bad value. But they are often paid infrequently, if regularly, meaning that you may get to the end of your overdraft a touch too early for the next payment to get you out of trouble. It’s in these circumstances that you need to look around for any alternatives – friends, relatives, credit cards and, if you need to, unsecured loans. These aren’t to be taken on lightly, but a cash advance can get you out of a tricky spot. If that’s going to save you more money (in late-payment fines, for example) than it costs in interest, then it may be a solution worth considering.
No debt is good debt, and it’s best to be really strict and structured about your finances in order to avoid accidentally running out of funds. And it’s true that short-term loans can be quite expensive – you can expect to pay around 30 percent over the course of a month, which is much more than you’d pay for a loan from a bank, or on your overdraft, or even on a credit card (the most expensive of which are around 30 to 40 percent per annum). But they are supposed to be short-term cash in fairly small amounts – typically between £75 and £750.
Whilst student loans may not be bettered in their terms, sometimes there’s no alternative. If you haven’t planned well – or have just been thrown a curve-ball by circumstances beyond your control – then a cash advance could get you out of trouble. Unsecured loans are usually expensive and not designed to function in the same way as a student loan; they are for short-term snags rather than long periods of time, and the interest rate reflects this (as well as the risk to the lender). However, if there aren’t any good (or cheaper) alternatives, then it makes financial sense to search for one. If that gives you the breathing space to address your budget and put measures in place so that the same thing doesn’t happen again, then it has served a handy purpose.
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