If you have a utility bill and you are not sure if you can pay it, then you may wonder whether a payday loan would be a useful thing to consider to help you out. While it is true that borrowing money in this way could be really useful for paying something like this, it is worth thinking things through to be sure. You need to understand how the loan works, how much it will cost, if you can afford it and how it compares to other alternatives before you make a final decision about whether to take the loan or not.
How much will the loan cost?
With all loans that you are considering taking out, you need to find out how much it will cost. It is important to know this as you can then decide whether you think that the loan will offer you good value for money or whether it seems worth it or not. It is relatively easy to calculate this as well. If you look at the lenders website they should have a calculator where you will be able to enter details of how much you want to borrow and how long for. It will let you know how much you will need to repay in full and from that you will be able to calculate the cost of the loan. As well as deciding on whether you think this amount is reasonable, you will also be able to use this figure to compare the cost to other lenders and you will be able to use that to decide which of the loans offers the best value for money. Lenders will vary in how much they charge for a loan and so it is worth comparing a few as you do not want to end up paying more than necessary.
Can I afford the repayment?
With a payday loan you will often be expected to repay everything that is owed in one lump sum. This means that you will have to find a large amount of money in one go. This can be tricky for some people. The loan repayment will go out on the day that you are next paid, which means that there should be the money available. However, it is important to check as if you borrow a large amount you may find that your pay check will not cover it. You will also need to allow for other expenses that will be going out on that day as well. Lastly, you need to make sure that you will have enough money left afterwards to manage everything else that you need to pay for in the month or until you next get paid.
Are there alternatives?
It is worth thinking about what alternatives there are to the payday loan. Compare the cost and also see whether the repayment terms are different. You might prefer to repay in small instalments, for example or to have more flexible repayments. It is worth thinking both about what you can afford and what you prefer to do and see whether you can find something that will fit both of these criteria. This of course, assumes that you choose an alternative loan. However, you may have savings which you could use instead or you might be able to contact the utility company and ask if you can repay the bill in instalments.
It is worth noting that you can use a payday loan to pay anything and so there will no restrictions on whether you use it for a payday loan. However, there are restrictions on how much you can borrow. You can normally borrow up to $1,000 which should be enough for some utilities but there will be some that are higher than this. This means that whether it is a good option for you, will depend on how much you need to borrow. The loans can be arranged quickly though and this can be more useful that some other types of loans which can take a long time to arrange and therefore the money may not be available in time.
The other restrictions on a payday loan are who can use one. There are not many though and it can be much easier to qualify than other loans. You will need a checking account so that you can set up a direct debit to repay the loan. You will also need a regular income so that the repayment can be set up for the day that you are paid. You also need to not be a minor as they cannot borrow money. One thing you will not have to worry about is your credit record. Most loans will do a credit check and if your score is too low they will decline your application. With a payday loan no check is done and so you will not have to worry about this.