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Most people need to borrow money at some time in their lives. However, you need to understand that some loans are far more expensive than others, and different rules apply to different types of loan. You should always compare interest rates and ask what the total amount is that you will have to repay.

Borrowing is also called 'credit'.

It is a good idea to work out your household budget before taking out a loan.

Find out more about different ways of borrowing money on the Citizens Advice website.


What types of credit are available?

Illegal money lenders and doorstep sellers and money lenders

You should avoid borrowing money from people who visit your home. Interest rates will usually be high, and the money lender may be acting illegally. An excellent alternative is to become a member of a credit union. Find out more about Doorstep sellers and money lenders.

Payday lenders

A payday loan is a short-term loan designed to cover you financially until payday. Online payday lenders include Wonga, Quickquid and Paydayloan. These loans are expensive and you'll usually be given up to a month to pay back the money you borrowed, plus interest. Charges are also added for late payment. Find out more about payday lenders on the Money Advice Service website.

Credit unions

The main credit union in Doncaster is Community First Credit Union (formerly South Yorkshire Credit Union). Community First Credit Union have branches throughout South Yorkshire and can be contacted on 030 3030 0010. Visit our Credit Union page for more information.

Credit unions offer an easy way to save and financial services such as low-cost loans.

Credit unions are not-for-profit organisations and are owned and controlled by their members.

Credit cards

Credit cards can be used to get cash and to pay for goods. You will be charged interest if you do not pay your bill in full each month, and you will be charged for withdrawing cash or using a credit card cheque.

Find out more about choosing and using a credit card on the Money Advice Service website.

Paying for goods in instalments  (credit sales)

Usually you pay interest on credit sales - but sometimes you can take advantage of an interest-free offer. You cannot return the goods if you change your mind and the supplier cannot take them back if you don't keep up payments. However, they can go to court to make you pay back the money you owe.

Paying for goods in instalments  (hire purchase or 'HP')

HP is different from a credit sale. This is because you are actually hiring the goods until you pay the final instalment. This means you can end the agreement and return the goods at any time. It also means the supplier can take the goods back if you don't keep up the payments.

Remember that even if you return the goods, you will have to pay overdue instalments, and you may have to pay up to half of the price of the goods if you haven't already done so.


Buying from catalogues is usually interest-free, although you can pay for goods in instalments. However, remember that goods in catalogues are often more expensive than in the high street stores.

Loans from finance companies

You will often come across these when buying items such as a car, or goods from a department store or electrical retailer. The car dealer or the shop will arrange a loan for you from a separate finance company.

Find out more about different ways of borrowing money on the Citizens Advice website.

Bank or building society loans and overdrafts

You may be offered a loan or an overdraft from a bank or building society. Always remember to check the interest rate and how much you will be charged for the loan or overdraft.

Secured loans cannot be taken against council properties.

Find out more about the difference between overdrafts and loans on the Citizens Advice website.


A pawnbroker will lend you money in return for property you leave with them. (This is called 'pledging' your property). You can get the property back at any time by repaying the loan plus interest.

Cash converters 

Cash converters offer pawnbroking services and other services such as cash advances on your salary and 'log book' loans against the value of your car. Always check how much any charges or interest will be – you will probably pay a lot of money for these services. 

Cheque cashing

Cheques made out to you can be exchanged for cash by a 'cash converter' or shops where you see signs such as 'We pay cash for cheques'. Try to avoid these, as you will have to pay to have your cheque cashed, and the service is usually expensive.

It is best to have a bank account to pay your cheques into. The service is free and you will not lose any of your money. Find out more about opening a basic bank account.

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