What Are The Alternatives to Payday Loans?

Last updated on October 28th, 2026 at 01:42 pm

A payday loan alternative is another way to access money without relying on a traditional payday loan that is typically designed to be repaid in a single payment around your next payday.

Having to repay the full amount on your next payday can put pressure on your finances, particularly when you still need to cover everyday living costs.

Payday loan alternatives include borrowing from a credit union, using an arranged overdraft, taking out a personal loan or asking your employer for a salary advance. Some options allow you to spread repayments over several months, making it easier to manage your budget.

The costs, eligibility requirements and repayment terms vary between providers, so it is important to compare the total amount repayable, not just the advertised interest rate.

Why Might You Want a Payday Loan Alternative?

Although payday loans can provide access to money quickly, repaying the entire balance shortly after receiving your wages can leave you short of money for rent, bills, food and other essential expenses.

Choosing an alternative could help you find a more manageable repayment schedule, reduce borrowing costs or avoid taking on additional debt altogether.

You might consider a payday loan alternative if you:

• Want to spread repayments over several months.
• Need to keep enough money available for essential expenses.
• Are looking for a lower-cost way to borrow.
• Have an unexpected expense and need time to repay it.
• Want to explore options that consider your current financial circumstances.
• Would prefer to avoid borrowing if a suitable interest-free option is available.

Before borrowing, review your budget and consider whether you can afford the repayments without relying on further credit.

Payday Loan Alternatives Compared

The following table outlines some common alternatives when you need to borrow £500. APRs and borrowing costs are indicative guides where applicable, rather than guaranteed quotes. Actual costs depend on the lender, product, repayment period and your circumstances.

The One Stop Money figure is based on its published example of a £500 loan repaid over 12 months, with a total repayment of £950.03. 

1. Borrowing from Family or Friends

Borrowing from someone you know may be one of the least expensive ways to cover an unexpected expense, particularly if they can lend you the money without charging interest or fees.

You may be able to agree on a repayment schedule that fits your budget, rather than having to repay the entire amount on your next payday. It is still worth agreeing on the amount, repayment dates and any interest in advance to avoid misunderstandings.

However, not everyone has friends or family who can afford to lend money, and borrowing can sometimes put personal relationships under strain.

2. Asking Your Employer for a Salary Advance

If you have an unexpected bill shortly before payday, asking your employer for a salary advance could help you access some of your earnings early.

Depending on your employer’s policy, you may be able to receive part of your wages before your usual payday without paying interest. However, you should check whether any fees apply and how the advance will affect your next salary payment.

A salary advance may be suitable if you only need a relatively small amount to cover a temporary shortfall. Remember that receiving money early means you will have less available when your normal payday arrives.

3. Using an Arranged Overdraft

An arranged overdraft allows you to spend more money than you currently have in your bank account, up to an agreed limit.

It can be useful for covering a short-term cash-flow problem, particularly if you expect to receive money soon. Some accounts offer interest-free overdraft allowances, while others charge interest on the amount you use.

Check your bank’s overdraft rate and any applicable charges before using this option. Although an overdraft may be more convenient than taking out a loan, costs can build up if you remain overdrawn for a long time.

4. Using a Credit Card

A credit card could be an alternative if you need to pay for an unexpected purchase or cover an expense that accepts card payments.

Some credit cards offer an interest-free period on purchases, provided you repay the relevant balance in full by the due date. This could make borrowing cheaper than a high-cost short-term loan.

However, cash withdrawals and money transfers may incur fees and interest from the outset. If you only make minimum payments, the balance can take a long time to clear. Check the card’s interest rate, fees and repayment conditions before applying.

5. Taking Out a Credit Union Loan

Credit unions are member-owned financial organisations that offer savings accounts and loans. Depending on the credit union, you may be able to borrow a smaller amount and repay it over a period that suits your circumstances.

Credit union loans are often a lower-cost alternative to high-cost short-term borrowing. In England, Scotland and Wales, the interest rate on a credit union loan is capped at 3% per month, equivalent to 42.6% APR. Individual rates and eligibility requirements vary.

You may need to become a member before applying, and some credit unions have specific membership criteria. If you qualify, this option is worth exploring before choosing a higher-cost loan.

6. Applying for a Personal Loan

A personal loan from a bank or other lender may be suitable if you need to borrow a larger amount or want a structured repayment schedule.

Personal loans generally allow you to repay the balance through regular instalments over an agreed term. Depending on the lender and product, interest rates may be lower than those associated with payday-style borrowing.

However, the rate you receive depends on factors such as your credit history, income and affordability assessment. Some personal loans also have minimum borrowing amounts that may be higher than the sum you need.

Compare the APR, total amount repayable, monthly instalments and early repayment conditions before making a decision.

7. Choosing an Instalment Loan

An instalment loan allows you to repay borrowed money in several scheduled payments instead of clearing the entire balance at once.

This may be helpful if you need emergency funds but want to spread the repayments across a number of months. Knowing the amount due each month can make it easier to plan your household budget.

However, instalment loans can still carry high interest rates, particularly when offered by specialist short-term lenders. A longer repayment term may reduce your monthly payment but increase the total interest you pay.

Always check the representative APR and total repayment amount, and make sure the monthly instalments are affordable throughout the loan term.

Why Choose The One Stop Money as a Payday Loan Alternative?

If you need to borrow money but would prefer not to repay the entire balance on your next payday, The One Stop Money offers an instalment loan alternative designed to give you more time to repay.

As a direct lender, The One Stop Money assesses applications itself and offers loans from £400 to £2,500, subject to eligibility and affordability checks. The most common amounts are £600 loans and £700 loans. Rather than requiring you to repay everything in one lump sum on your next payday, you can spread your repayments over 6 to 24 months in equal monthly instalments.

This flexibility can give you more breathing room when managing unexpected expenses alongside your usual bills. You can also choose to repay your loan early without additional early repayment fees, which may reduce the total interest you pay.

Here is what you can expect when applying to The One Stop Money:

A Direct Lender Since 2005

The One Stop Money has operated as a direct lender since 2005. This means it assesses and funds its loans itself, rather than acting as a broker that passes your application to another lender.

Authorised and Regulated by the FCA

The One Stop Money Shop Ltd is authorised and regulated by the Financial Conduct Authority (FCA), registration number 713424.

Quick Loan Decisions

Most applications receive a decision within one to two hours. Additional checks or information may be required, and a decision does not guarantee approval.

Same-Day Payouts

If your application is fully approved before 3:30 pm on a working day, your loan will usually be paid into your bank account on the same day. Payment times depend on approval and completion of the necessary checks.

Borrow Between £400 and £2,500

You can apply to borrow between £400 and £2,500. The amount you are offered depends on your income, financial commitments and affordability assessment.

Flexible Repayments Over 6 to 24 Months

One of the key differences between The One Stop Money and a traditional payday loan is the flexibility of its repayment terms.

You can spread repayments over 6 to 24 months, allowing you to make regular monthly payments instead of facing the pressure of repaying the whole balance on your next payday. This can help you plan ahead and manage your money more comfortably.

The repayment term you choose will affect your monthly payments and the total cost of borrowing, so it is important to compare the options before accepting a loan.

Bad Credit and CCJs Considered

If you have a poor credit history or a County Court Judgment (CCJ), you may still be able to apply.

The One Stop Money considers applications based on your current circumstances, including your income and ability to afford the repayments. Approval is not guaranteed, and affordability checks still apply.

Free to Apply

There are no fees for submitting an application. You can review the loan offer, including the interest and total repayment amount, before deciding whether to proceed.

Repay Early Without Additional Fees

If your circumstances improve and you want to clear your loan sooner, you have the option to repay early without additional early repayment fees.

Early repayment may reduce the total interest payable, depending on the terms of your agreement and the outstanding balance. Contact the lender for an early settlement figure before making your final payment.

Is The One Stop Money Right for You?

The One Stop Money may be worth considering if you need between £400 and £2,500 and want to spread repayments over several months rather than repay the entire amount on your next payday.

Its flexible terms, quick decisions and consideration of applicants with poor credit histories may make it an option for people facing an unexpected expense. However, its loans are not necessarily the cheapest option, and the total cost should be compared with alternatives such as credit unions, interest-free borrowing and personal loans.

Before applying, check the monthly repayment, representative APR and total amount repayable. Only borrow what you need and what you can comfortably afford to repay.