Since taking out a payday loan is a relatively significant financial commitment, it is best to get clued up about the ins and out of taking out a payday loan. This is essential that you can make an informed decision about whether or not any given loan is right for you and so that you can find the best loan provider who is FCA registered.
Due to the accessible nature of payday loans, they are becoming an increasingly popular way for people to obtain a cash sum quickly. It is now far more common for people to take out a payday loan as a way to tide them over until their actual payday cheque comes through. In this guide, we provide you with some things to think about before taking out a payday loan.
Are you eligible?
Some providers will only grant loans to those who they deem to have good credit ratings. If you have a bad credit score, you may not qualify for a loan with certain lenders. However, for specific payday loans bad credit there are companies who may be able to accommodate and this could involve charging a higher rate of interest, adding a guarantor or added security to your application.
Before taking the time to apply for a loan, check up on your credit score with the likes of Experian and Noddle to see which lenders you should be taking the time to apply with. This will save you a lot of time and effort.
Do you really need a payday loan?
Consider this carefully. A payday loan seems like a highly attractive option for obtaining short-term financial assets, however, it may not be the best option for you. Think about why you are taking out the payday loan – is it to buy something or pay for something necessary?
Whilst on average, a person will take out a relatively small amount when it comes to payday loans, the amount they pay back could end up being significantly more if the repayments are relayed for any reason. Assess whether you will have the funds to repay the loan in full, including the extras.
Keep in mind that there are other options, but the popularity of payday loans does speak for itself – it is short-term, quick to obtain and if paid back, hassle-free.
What are the terms of the repayment?
Each payday provider will be offering different terms and conditions on the loan, therefore, it is vital that you check these in detail to make sure you are aware of the what you are signing up for.
Look for things like the annual percentage interest rate in order to learn how much you will actually be paying back overall. You should look for the specific fees which you will be charged as part of taking out the loan.
Once you have got a clear idea of what the terms of repayment are for any given plan, you can then begin to plan ahead for this repayment that has to be made in the future. Remember to budget the loan into your monthly budget since you have made this financial commitment. You may need to make a few adjustments accordingly.