Common uses for payday loans

Unexpected expenses can catch anyone off guard. Whether it’s a broken boiler in the winter, an urgent car repair, or a hefty energy bill, there are some costs that just can’t wait until payday.

In situations like these, payday loans can offer a short-term way to quickly cover emergency costs. When used responsibly, they can bridge a temporary financial gap and help you manage emergencies without delay.

With this in mind, we’ve explored some of the most common reasons someone might consider a loan, from dental costs to MOT repairs and appliance repairs to emergency home improvements. We’ve also outlined some payday loan alternatives to help you choose the right option for you.

In this guide: 

• 6 typical payday loan uses
• Practical advice for managing unexpected costs
• Payday loan alternatives
• Where can I get free financial advice? 

Typical payday loan uses

When used carefully and responsibly, payday loans can help you cover a variety of unexpected costs. Here are some common situations when a loan might be considered:

1. Emergency loans for unexpected bills

Sudden spikes in gas or electricity bills, especially during the colder months, can stretch even the most carefully planned budgets. A flexible payday loan can help cover the surprise cost when you don’t have the cash to spare, helping to tide you over until your next payday.

While emergency loans for unexpected bills can sometimes provide temporary relief, they shouldn’t be used as a long-term solution.

So, if you find that your energy bills are consistently unaffordable, it’s a good idea to check whether you could be eligible for support through benefits or government schemes, or consider switching your energy supplier. And if you think you might be at risk of missing a bill payment, contact your provider right away to let them know. You might be able to negotiate a more manageable repayment plan.

For more insights, explore short-term loans for bills.

2. Car repairs and MOT costs

Your car breaking down can be much more than just an inconvenience, impacting your ability to get to work, do the school run, and attend scheduled appointments. MOTs and repairs can be expensive, and not everyone may have savings set aside to cover them.

In situations like this, a short-term payday loan for MOT costs could help provide the funds you need to get your car back on the road. Alternatively, if you’re looking to prevent issues, our guide on avoiding winter car repairs explores the importance of regular servicing and maintenance.

3. Appliance repairs

When essential appliances like your fridge, cooker, or washing machine break down, it can disrupt your whole daily routine. What’s more, repairing appliances and white goods can be expensive. It can be challenging to plan for emergency repairs around other financial commitments, which can leave many without the necessary funds.

If you need to fix or replace an important home appliance, a payday loan could be a helpful solution. Many payday loan applications are processed quickly, so if you pass the eligibility checks, you’ll be able to get things back up and running without delay.

4. Emergency home repairs

From leaking roofs to burst pipes, there are various home repairs that require urgent attention. But if your home insurance won’t cover the repair, or you’re yet to build up a substantial emergency fund, the costs can be overwhelming.

When faced with unexpected home repairs, a payday loan can help you cover the cost of the work. Before you borrow, it’s worth checking whether your landlord (if renting) or home insurance might be able to cover the costs. Some councils also offer grants and emergency help in certain situations.

Read more about payday loans for home appliances.

5. Vet bills

Pet emergencies are stressful to say the least, not to mention the vet bills that can run into the hundreds for things like surgery, tests, and out-of-hours treatment.

Without pet insurance or emergency savings to fall back on, some pet owners turn to short-term loans to cover urgent care. Just remember, if you’re considering a payday loan for unexpected expenses like vet bills, it’s important to make sure that you’ll be able to comfortably afford the repayments. If not, it might be time to look into alternatives.

6. Dental costs

Whether it’s a broken tooth, a lost filling, or an unexplained pain, dental emergencies can be expensive. If you’re not registered with an NHS dentist or you need private care, costs can quickly add up.

When facing urgent dental bills, short-term loans can be used to cover the essential treatment and then be paid back in manageable instalments. Before borrowing, it’s often a good idea to ask your dentist about NHS emergency appointments and phased treatment plans.

Practical advice for managing unexpected costs

When an unexpected cost catches you off guard, it can be difficult to know where to turn. But taking a moment to step back and review your choices can help you stay in control:

1. Review your budget: Before you do anything, it’s important to take a close look at your current budget and see if there’s any non-essential spending you can reduce to help free up some funds.
2. Contact your providers: Whether it’s your energy company, landlord, or car garage, many providers offer payment plans or hardship support if you’re open about your situation.
3. Start building an emergency fund: Setting aside small amounts regularly can help protect you from future financial shocks. Pay whatever you can into a savings account each month and you’ll soon notice the funds build up over time.

Payday loan alternatives

So, should you take out a loan for unexpected expenses? While payday loans can be a convenient and quick way to access cash, they typically come with higher interest rates than other forms of credit.

If you’re worried about repayments or you’re falling behind with other essential bills, you might want to consider some payday loan alternatives. Here are a few options that might be a better fit:

• Authorised overdrafts: These allow you to borrow money from your current account up to an agreed limit. Some banks offer interest-free overdrafts, but with others you’ll incur fees until you clear the balance.
• Borrow from friends and family: A personal loan from someone you trust might be preferable to taking out high-interest credit. You’ll just need to be clear about repayment terms to avoid any issues.
• Salary advance: If a sudden cost has left you unsure where to turn, you might be able to request a salary advance from your employer. This is where an employer allows a member of staff to access a portion of their wages early.

Where can I get free financial advice?

If you’re feeling overwhelmed or are wondering where to get advice, third-party support charities and organisations can help you understand your options:

• Citizens Advice: Offers free help with budgeting, employment, benefits, and more.
• MoneyHelper: A government-backed service offering guidance on money and pensions.
• StepChange: A charity offering specialist debt advice, including help with repayment plans and budgeting.

Discover more helpful resources

Remember, when unexpected costs arise, there’s plenty of support out there to help you get back on track. While payday loans are commonly used to cover urgent expenses, they’re just one of the options available, so it’s worth exploring what works best for your situation.

If you’re looking for more guidance, you’ll find plenty over on the Moneyboat blog. There, you can explore guides on how to pay off debt quickly and what to do if you're struggling to pay off your payday loan.

We’ve also pulled together some insights on debt and mental health, exploring the link between borrowing and wellbeing.