Should I be Worried about payday loans?

We do tend to see quite a bit of bad publicity about payday loans and this can make us feel that there is something to be worried about. As a payday loan is a loan then there are risks that you need to be aware of which are similar to those of other loans. It is worth being aware of these risks so that you can be careful when you are deciding whether a loan is right for you as well as whether you are the right type of person to take out a loan.

How payday loans work

Payday loans are normally for anything between a few hundred and a thousand pounds. They are available very quickly and no credit check is done. This means that they are available to more people than standard loans tend to be. Repaying the loan is a bit different as well. You need to repay it all in one lump sum payment. This is why you cannot borrow too much as it needs to be affordable in order to make sure that you can repay it all. The repayment date is on the day that you are paid, hence the name. This means that you should have enough money available to be able to make the payment.

Risks of a payday loan

With all loans there is a risk that you will not be able to make the repayment on time. With a payday loan, you have to set up a direct debit for the repayment so it should be easy to repay it. The risks come if you pay is late or if the repayment tries to come out before your pay goes in. You will need to be careful about this and ensure that the pay will be in the account before the payment comes out.

You also need to then make sure that you have enough money to pay for everything for the rest of the month. We all have regular things that we have to pay for and so once a big lump sum, like this loan repayment goes out of our account it can make things really difficult. You will need to be sure that you will be able to manage to cover all of your other costs as well as repaying the loan, otherwise there is a risk that you will need to borrow even more money.

Any borrowing will appear on your credit record and if you want to borrow money using a lender that does do a credit check then they will take a look. Any borrowing they might be concerned by but you can reduce the risk of a payday loan having a detrimental effect on your credit record if you ensure that you repay it on time and do not take out successive loans.

Who should avoid payday loans

If you feel that you will not be able to manage the repayment then you should not be taking out the loan. Carefully look over your past bank statements to see whether you would normally have enough money to be able to do so. If you have any doubt, then think about whether you might be able to cut back your spending in order to afford it. If you feel that this is unlikely then it is better to avoid the loan.

If you have savings then you will have no need to take out the loan so you should avoid getting one. Using savings is far cheaper than getting a loan and so is the wise choice, if you have any.

If you know that you will be able to afford the loan but then will struggle for the rest of the month then it is best to avoid the loan. You might be tempted to take out another loan, if you cannot cover the cost of your bills and this could escalate into lots more borrowing. It is best to be very sensible and only borrow if you are sure that you will be able to afford the repayment and that you will be able to afford to cover the rest of your bills as well.

Who should worry about payday loans

It is good to be aware that you have a loan so that you are always conscious that you need to be careful with what you are doing with regards to your money. You need to make sure that there will be enough to pay the loan and to pay for everything else you need as well. If you are happy that you will be able to do this then you have no reason to worry, but you do need to be careful.

You should enter all loan agreements with the same caution and make sure that you take the repayments seriously or else you could end up paying out far more for the loan that you originally expected to.

Who is the Best Payday Lender?

When we take out any loan or even any financial product then we will want to go with the company that is the best. However, this can be tricky Not necessarily because it is hard to find the best but because everyone has a different idea as to what makes a good lender and therefore there would not be in agreement over which is best. To find out which would be best for you then you need to go through a certain process.

  • Decide what you want from a lender. It is worth taking some time to ponder what it is that you want form a lender. It can be tempting to think that you are only interested in the cost of the loan and so you will be happy with the cheapest lender. However, you will probably find that this does not actually turn out to be the case. Although cost will still be a big factor, you will begin to see other features that are important to you as well. It might be important to you, for example that the lender has a good reputation, that they do not charge significantly more than others if you miss a repayment or that they have good customer service. It is wise to note down your ideas in a list and then as you start to investigate lenders you will be able to focus on these things. You may though, as you find out more about the different ways that lenders work, decide to add to your list. This is fine, it means that you are being flexible.
  • See what lenders there are and what they are like. There are a lot of payday lenders and you may not have time to research all of them. However, it is important to have a good idea about a lot of them so that you can carefully pick between them. There are different places where you can find out about who lends money like this. You could just use a search engine but some lenders will pay to come up high in search results and this may bias your decision. You could look up companies you have heard of directly. You may also want to look at comparison search engines where you will see quite a range of lenders. If you look at several of these comparison sites you may find that they list different lenders to each other so you will be able to find out about even more. You may also be able to find out about more lenders by asking people you know or looking on finance websites.

It is good to take a look at some of their websites and get an idea of what they might be like. You can start to eliminate lenders that you do not feel are suitable for different reasons. As you work towards getting a short list of lenders then you may wish to contact some of them and ask a few questions to find more out about them and their customer service.

  • Match a lender to your requirements. Once you have quite a list, then you can start seeing if they meet your requirements. You may have already eliminated some because they do not but you may need to investigate the ones left in more detail so that you can get a really good idea as to whether they fit in with what you are looking for. As there are a lot of different lenders you should be able to find at least one that will fit your requirements, even if you have a bad credit rating.  It is worth taking time ding this research as then you are much more likely to be happy with your choice of lender when you do take out your loan.

This sounds quite straightforward but it could take some time. Be careful though not to give up as it will be worth it. You will be able to make sure that you get the lender that best suits your specific requirements. It is worth taking this time as there can be big differences between lenders. You will also be paying for their service and you want to give that money to the most deserving.

If you are looking for a payday loan then you could be in a hurry for the money. This could mean that you feel you do not have time to do the research or you are in such a panicked state that you cannot think logically. It is important though so get someone to help you if you feel that you will not be able to manage it yourself. You should be able to find a good friend or family member that will be able to help you with it and they will be able to look at it from a calmer frame of mind.