If you need a loan then you may wonder whether a payday loan
will be an option for you. There are lots of loans and other options which
could be beneficial to you and it is worth comparing them in order to think
about which will be the best. One option, a payday loan, might be something
that you know less about. As they are relatively new, if you have not used one
before then it is likely that you will not have a big knowledge of them. It is
worth finding out more about them so that you can decide whether they are
something which will help you. Below are a few basics but it is worth doing a
lot more research if you decide that you feel they are the right option for you.
How much can I borrow?
A payday loan is unlike other loans because they lend smaller amounts. This is really handy for those that only want to borrow a small amount and do not want to feel forced into borrowing more than they need. However, if you do need a large amount, perhaps more than £1,000 then you will have to look for a different type of loan. You may also find that if you are a first-time borrower then you will not be allowed to borrow very much. Lenders can be cautious and may want you to repay a small loan first, before they are willing to lend you higher amounts. This is because payday lenders do not do a credit check and so need to find another way to build up trust with their customers.
Who can use them?
As they do no credit check, payday loans are available to a lot more people than lenders that do one. This means that many more people can use them. There are actually very few restrictions. You must not be a minor, you must be a US resident, you must have a regular income and a checking account. The is normally all the criteria you need in order to borrow money from a payday lender. This means that it is very likely that you will be able to have one if you decide that it is the right option for you.
How are they repaid?
It is worth understanding how payday loans are repaid as it is quite different to many other types of loan. The payday loan is repaid in one lump sum. This means that you have to find a lot of money all at once rather than repayments being spread out in instalments. This can be great for those that like getting their loans paid off early and do not like being in debt. It is important though to make sure that you will be able to afford the repayment. Check out how much it will be and think about whether you will have enough money for this repayment. You will be able to find out how much it will be by using the calculator on the lender’s website. You can check if you can afford it by looking back at your checking accounts statements. Also think about whether you will be able to manage all of your other expenses once you have repaid this loan. It is worth spending some time doing this calculation as if you cannot repay the loan you will have to pay extra fees and if you cannot manage once the loan is repaid you may need to get another one.
Are they right for me?
Deciding whether they are right for you does not just depend on the factors above, although you should consider them too. You need to think through what it is that you are expecting from a loan and decide whether the payday loan fits your criteria. You need to be sure that it will work for you. It is wise to also think about how much it will cost you and whether you feel that it will offer you good value for money. Then you will be able to compare the different lenders that offer payday loans and decide which one will be the most suitable for you. It is worth taking the time to do this research and the calculations as you might regret your decision if you do not. You want to be happy that you have made the right decision to get a loan, that you are using the best type of loan, the best lender and that you will be able to repay it. It can be hard to make these decisions with a clear head if you are panicking about needing money. It can be wise to see if you can get someone to help you who might be able to think more logically and absorb information better because they are not worrying about money like you are.
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.