Payday loans are often misunderstood and people may think that they are just for certain people or certain circumstances, such as for emergency use. It is good to make sure that you have an understanding of how the loan works and who it is for, so that you can decide whether to consider it when you are looking for a loan. It is unwise to just dismiss it without knowing more about it.
How do payday loans work?
A payday loan is a short-term loan where you will borrow up to £1,000 for a few weeks. The loan is repaid on the day that you get paid and this means that you will only borrow money for a few weeks as you have to normally repay the whole loan and interest in one go. They are available without doing a credit check and they can be arranged quickly. The sort term is attractive to those people who do not like the idea of being in debt and want to
Who are they for?
As payday loans do not require a credit check, then it is often thought that they are just for those who have a poor credit rating. Actually, they are available for anyone who needs this sort of loan. It is wise not to discount any sort of loan when you are deciding whether you want one as you may be getting rid of one that really suits your need. Comparing all options should help you to find the loan that will offer you the best value for money.
What are they for?
There are just a few loans, such as mortgages and car loans, which have a specific purpose, Payday loans do not have this but as you can only borrow up to £1,000, they are obviously for cheaper things. However, those things can be anything from specific items, to bills or food. No question is asked about what you use them for and there was no specific purpose built into them when they started.
Are they just for emergencies?
This is a tricky one to answer. Most loans should really only be for emergencies. This is because they are expensive and if you can avoid that expense then you should do. However, there are some loans which can help you to improve yourself or your situation such as mortgages and student loans which are certain not for emergencies. A payday loan does not provide enough money for long enough to be considered to be able to help improve yourself. However, it could still have a positive impact on your life.
If you really want something and you are prepared to pay more for it, then you could take out a loan and it not be for emergency purposes. The thing with using a payday loan for this is that you have to repay it so quickly. It might be better just to wait a few weeks for your payday and then buy the item that you want. If it is too expensive for you to afford that way, then a payday loan is not the answer either as you would have to repay that in full very quickly anyway and if you cannot afford to do that then you should not be taking out the loan in the first place as you will not be able to afford to repay it.
If you need money but do not have an emergency then consider whether borrowing is the right solution. If you decide that it is then you will need to compare the different loans available to you in order to find out which one will be the best to suit your needs. It is important to look at the cost of the loan, how easy it will be for you to repay and how long it lasts. You may also want to consider whether you like the lender and what their customer service is like. You should take your time to consider all of the factors so that you know whether the loan is right for you.
It might seem like a lot of effort just for a loan for a bit of money. However, it can make a great deal of difference if you find the right one. Not only might you save a significant amount of money if you find a cheap loan, it could be that you will find it easier to repay or that you will get a better service form the lender. Repayment is probably the most important factor as you will not want to miss repayments. Not only will this show up on your credit report but it will make the loan even more expensive. So do work out how much you can afford to repay so that you make sure that you will be able to cope.