Whilst loans can be a convenient way of paying for out-of-pocket expenses, they carry extra costs in the long run. If you can’t afford something and don’t want to take out a loan, here are 7 alternative funding options to consider.

Sell your clutter

Many of us have unwanted possessions in our home that we can sell for cash. You may be able to take these items to a second-hand store and get some money for them straight away, however you’ll likely get less money that using other selling methods. Online sites such as Gumtree are often one of the best ways of selling clutter, providing you don’t need the money in a hurry – you can find local buyers who can pick the item up rather than having to deliver the item, and you can set your own price. Other ways of selling your clutter could involve taking items to auctions, hosting a yard sell, pawning these items or recycling them for cash. Explore all your options to find the most profitable one for each item (for example, antiques may be better sold at an auction, whilst old broken electronics may make more money being sold for parts).

Borrow from your pension       

It’s possible to borrow money from your pension pot. This could leave you with less money to retire on, although you could always make efforts to pay this money back into your own savings account (you won’t have to pay any interest because you’re technically borrowing from yourself). In certain cases, there may be restrictions preventing your from accessing your retirement fund early – you can read more into borrowing from your pension here.

Get an equity release

If you own a property and have owned it for a while, it’s likely that this property has increased in value over the years. It’s possible to access this added value without selling your property by opting for something called an equity release via companies such as Sun Life. This is technically a loan, but you only pay it back when your property is sold or when you die, making it more practical than a regular loan that has to be paid back straight away. An equity release isn’t a good option if you plan to sell your property soon and upsize. Many people use it as an extra retirement fund, usually when they don’t plan to ever move.

Seek legal compensation

In the case of an emergency cost, consider whether the emergency was directly caused by someone else. Car accident repairs or medical treatment costs could be covered by legal compensation if you believe that somebody else directly caused the damage, saving you the unnecessary costs of taking out a loan. There are many lawyers out there such as Slack Davis Sanger Law Firm that can help you potentially win compensation for accidents as wide ranging as medical malpractice to aircraft accidents. This money is not something that you’re likely to get access instantly, but it could still be worth waiting for in certain cases.

Get funding from investors

If you’re trying to fund a business or some kind of community project, you could always consider seeking out investors rather than taking out a loan. You don’t have to pay back the money that an investor gives you, however many investors will generally want something in it for them such as future shares in profits. Investors will also generally only give you money if they believe in your cause – you may want to spend some time writing up a persuasive pitch as well as getting a financial advisor to help you with figures.

Borrow from a friend/family member

By borrowing from a friend or family member, you could prevent yourself from having to pay interest and arrange a more flexible means of paying the money back. Of course, you do need to be careful of borrowing from friends and family as it can put a strain on your relationship. Make sure that you have the willpower to pay them back.

Save up

When it comes to non-emergency expenses, you could always take the old-fashioned option of saving up. This is a much slower process that takes a lot of willpower, but it’s undoubtedly the most rewarding way of raising funds. You could even consider putting the money in a high interest account where it will naturally increase in value. There are some things you can’t save up for (few people can save up for a house without using some kind of loan in conjunction), however treats such as a holiday or a new car could be things that you can save up for.


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