Taking out a payday loan shouldn’t be an impulsive decision. It should be something that you’ve thought about long and hard and have researched. This article takes you through everything to think about and provides you with payday loan advice and tips to ensure you make the right decision.
Whether you really need a payday loan
Payday Loan Advice
This article is full of handy payday loan advice and tips for anyone planning to take out a payday loan. We take you through all the factors you have to consider before taking the plunge and borrowing money.
Do you Really Need to Borrow Money?
The first question you have to ask yourself is if you really need to borrow money at all. Be brutally honest with yourself – ‘I want’ isn’t the same thing as ‘I need’. Is your situation really an emergency? Bear in mind that any borrowing comes with a price tag and will end up costing you more.
Are There Alternatives to Payday Loans?
Before taking out an instant payday loan, run through possible borrowing alternatives. Using a credit card or an authorised overdraft would both work out cheaper than a short-term loan. Other possibilities could be borrowing from family/friends, joining a Credit Union and taking out a loan or asking for an advance from your employer/the DWP. Of course, they’d all have to be repaid, but the cost is much lower.
When Should/Shouldn’t you Use a Payday Loan?
Payday loans are ideal when you need money for an unplanned emergency such as when your car breaks down, or your central heating is on the blink. Such cash loans can see you through until your next payday.
However, they aren’t suitable for repeated borrowing as a result of overspending. In this case, your best option is to draw up a budget and/or contact a debt advisory service. They aren’t appropriate either if your income has fallen and you have a shortfall. Remember that they have to be repaid and without a regular salary, you can find yourself getting further into debt when you can’t make the repayments. Instead, think of ways to make up your lost income.
Check your Eligibility
To be eligible for a payday loan, you have to be 18 or over; be a UK resident; usually, have an active bank account and have a regular source of income. If you don’t meet these requirements, you might find it difficult to access a loan.
The Size of the Loan and its Duration
You should also think about how much you need to borrow exactly. Borrow too little, and it won’t help you deal with your emergency need for cash. However, borrowing too much means you end up paying more for the loan.
Equally important is the length of the loan. Spreading repayments over a few months means lower instalments but don’t forget that you’ll pay more in interest.
Using Price Comparison Websites
A good place to start your search is with a price comparison site but use several to get an idea of what’s on the market. Once you enter the sum, you wish to borrow and for how long, these sites can give you essential information.
Although the APR is useful to know, concentrate on how much you’ll have to repay in total and if necessary, your instalments. Check your expected income in the coming months and that you’ll be able to repay once you’ve met your other financial commitments. If you’ll find it a struggle, make the loan of longer duration or re-consider your decision to take out a payday loan.
Finding the Right Lender
Finding the right payday lender isn’t just a question of picking a lender at random from price comparison sites or choosing one whose name you recognise from advertising campaigns. They aren’t necessarily the cheapest in the long-term nor the best. Once you have a few names, look at other elements. Go to the firm’s website to get an idea of the firm’s business ethics and if they follow a responsible lending code. Are there fees associated with early repayment of the loan and what would happen if you miss a repayment or default?
Also, check that the lender isn’t a rogue firm. At the bottom of their homepage, you should find their 6-digit licence number, which you can verify with the FCA. The market’s regulatory body also has warnings of any unlicensed firms. Also, never pay a lender a fee upfront.
Quick Loans Express is a fast loans direct lender that is fully authorised by the FCA and has very competitive prices for same-day loans.
Taking out Multiple Loans
One of the worst mistakes you can make is to take out several loans from different lenders. All reputable lenders carry out affordability checks, and you’ll be given a loan on the financial commitments you have at that time. Several loans in rapid succession mean that the lender isn’t able to judge whether you can afford the loan as the others won’t have shown up on your financial records yet. This will make your financial situation worse – rather than better – as you might find yourself defaulting on more than one loan and incurring extra charges. Very rapidly, your debts will spiral out of all control.
The Loan Application
Once you’ve found the lender who’s right for you, applications can be made online in a matter of minutes. The lender’s decision will also be quick once all the checks have been done. Don’t just click ‘I accept’ when you read the terms and conditions of the UK loan online. Make a point of reading them. Think of the click to accept as the equivalent of putting your signature to a document.
Although speed is often of the essence when you take out a payday loan, take the time to make sure a loan is the right decision for you. Also, shop around for the best loan and lender for your circumstances. Following the payday loan advice in this article means that you will be one of the millions of satisfied payday borrowers who don’t regret taking out a short-term loan.