Cheapest way to borrow money if you're struggling and need extra cash

IF you're struggling and need extra cash then we explain the cheapest way to borrow money.

A word of warning – only think about borrowing money if you really need to.

For example, if your car breaks down or your washing machine gives up.

If you're thinking of borrowing cash to pay for a holiday or a new purchase like a sofa, then think about whether you could wait and save the money first.

If you do borrow cash, then always factor in how you're going to repay it. Look at the monthly repayment and add it to your budget.

Make sure you're happy with the interest you'll pay in total once the debt is repaid.

The cheapest way to borrow money will depend on your specific circumstances.

For example, how much you need and for how long. Your credit rating will also affect your chances of getting accepted and the interest rate you'll get.

With a good score you can get top high street rates and borrow more money but if you had a bad credit history you could find you're unable to borrow money at all.

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The cheapest way to borrow cash at short notice is to ask your friends and family if they can loan you the money.

If you can do this, then you should agree how much you'll borrow and when you'll be able to pay them back.

We take a look below at some options for borrowing cheaply.

Firstly you should check if you're owed any cash or can apply for a free grant.

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Check your benefits

At least seven million people are losing out on more than £15billion worth of unclaimed benefits, according to charity Turn2us.

The average amount people claim a year is £5,320, according to the anti-poverty charity – which means that you could be missing out on thousands of pounds.

Nearly one million families are missing out on £2.9billion pounds worth of Universal Credit, while 745,000 are missing out on £3.3billion of untapped Housing Benefit claims.

To check whether you're eligible for any benefits, you can use Turn2Us' new online benefits calculator, which will take your 10 minutes.

You'll need bank statements and information about your housing costs handy to use the tool.

Welfare assistance grants

Hard-up families can apply for free cash and grants for furniture, bills and food up to £1,000 under the welfare assistance scheme.

You can apply for these grants through your local council – and they are available to people on low incomes who have run into financial difficulty or those who have had to deal with a crisis.

You can get up to £1,000 in some areas – but some councils don't even have a scheme that families can apply to at all.

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Household Support Fund grants

If you don't have enough cash to pay for household essentials, you might want to check with your local council.

How much you can get is determined on a case by case basis – which means your local council will decide how much to give to you.

Universal Credit emergency loan or advance

If you're on Universal Credit then you may be able to get a Budgeting Advance to help pay for emergency costs like a new cooker or travel to work.

It is a loan, so you'll repay it back through your Universal Credit payments. Your payments will go down while you pay it back.

The smallest amount you can borrow is £100 and the maximum is £348 if you're single, £464 if you're a couple and £812 if you have kids.

Cheap credit card

First you need to think about what the card is for. If it's for purchasing then you need to look for a 0% purchase credit card.

If you want to pay off debts then a 0% balance transfer cardwill be best, although you will pay a fee to move your money onto the card.

You'll have a set amount of time to pay back the debt. For example, the longest balance transfer is currently 34 months.

Only those with top scores will get the best cards and rates. Use and eligibility checker to find out what cards you are likely to get accepted for, without leaving a mark on your credit file.

Cheap personal loans

Personal loans are usually best for bigger purchases or if you need to consolidate debts and pay them off.

If you have a good credit score you'll get a better rate and pay off less interest.

You will agree to to pay back the amount over a set period of time in fixed monthly repayments.

Use a comparison site like MoneySupermarket or GoCompare to compare rates.

Use an eligibility checker like MoneySavingExpert's to find out which loans you could be accepted for, without damaging your credit score.

Credit unions

Credit unions are locally-based organisations where members pool their savings to lend to one another.

This often allows them to offer low cost products and there are hopes that the sector can provide an alternative source of finance to banks and high cost pay day lenders.

They can offer a range of savings accounts, current accounts and loans to their members. You have the flexibility to save how much you like, when you like.

You usually have to pay a fee to join but they do offer competitive rates.

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