Pay Day Loans: Everything You Need to Consider Before Taking One On

Getting a payday loan can be a really convenient way of obtaining the funds that you need quickly, whether you need to cover an unexpected emergency expense or want a quick way to consolidate existing debts and get them all paid off faster.

Payday loans can vary a lot in terms of not only the amount of money available to borrow, but also the amount of time that you have to repay them. Many people mistakenly believe that because of the name, you always need to repay a payday loan in full on your next payday – but this isn’t always true, with many lenders offering options to pay the loan back over several months or even years.

A payday loan can be a handy way to get the cash you need often on the same day, but it’s worth taking some important factors into consideration before you apply.

How Much Do You Need?

First of all, consider how much you need to borrow. It can be tempting to apply for a little more than you actually need if you are eligible to, but this isn’t always a wise idea as you’ll end up making larger repayments. It’s worth sitting down and thinking about the exact amount of money that you will need to cover the expense, and applying for that only. This way, you will only need to repay for money that you actually needed and will not be tempted to borrow extra money to spend on things that aren’t urgent.

What Will You Use the Loan For?

Consider what you need to use a loan for. In some cases, you might find that borrowing money isn’t the only option available to you and there are cheaper, easier alternatives to consider. For example, if you need to replace a broken appliance, you may be able to afford a second-hand one without borrowing or borrow money from a family member or friend that you can repay without any interest, charges or impact to your credit rating.

A washing machine

If you need something new, you might be able to sell unwanted items that you have at home to raise the money to buy it. Consider how urgently you need to make the purchase, and whether you are able to wait a while to come up with an alternative way of affording it.

How Reputable Is the Lender?

In recent times, payday lenders have gotten a lot of bad press for irresponsible lending. The good news is that there are much tighter regulations on payday lenders these days as a result, so if you are struggling to find a loan, that might actually be a good thing in the long run. Chances are, you would struggle to repay it if you borrowed money now, and lenders are doing the right thing – even though it might not feel like it at the time.

Before applying to a lender, do some research to ensure that they are reputable and treat their customers fairly. A good way to find reputable lenders is to apply via a pay day loans UK broker such as Payday UK. All you need to do is enter your details into the site and they will search their trusted panel of lenders to find options that are suitable for you. Not only does this ensure you find a reputable lender but it will also minimise your chance of applying to loans you are rejected for. You can learn more here.

Can You Afford Repayments?

Before you make an application for a payday loan, take some time to consider whether or not you will be able to afford the repayments. Before you apply, you should be given a breakdown of repayments by the lender, so that you know exactly how much you will be required to pay back to them each month or week for a specified duration.

Financial planning with a pen and calculator

This gives you the chance to sit down and work out how much money you have coming in each month and how much you have left after paying your priority expenses. If you don’t have enough left to repay the loan or will be leaving yourself with no money after paying everything, it’s best to consider a different option.

Do You Have Existing Debts?

You should also take any existing debts that you have into consideration before getting a payday loan, and ensure that making repayments to your new loan will not affect your ability to repay the others. It might also be worth considering using a payday loan to consolidate your existing debts. If you have several smaller debts, a payday loan can be used to clear them all quickly, before repaying only the payday loan with one payment each month and clearing your debt completely.

Payday loans can have a multitude of uses whether you want to clear existing debts or make a large one-off purchase. Keep these tips in mind before you apply to find the best loan for your needs.

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