How to Ensure you Can Repay Payday Loans

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Whenever you take out a loan, it is really important to make sure that you are able to repay it. With a payday loan this can be even more tricky as you will have to repay it really quickly. A payday loan will have to be repaid in full when you next get paid. This could mean that the loan will only last a few weeks or maybe even just a few days and so you will need to be really sure that you can afford to repay it. There are things that you can do though, to give yourself a much bigger chance of being able to repay it on time and in full.

Check How Much You Need to Repay and When

It is wise to start by checking out exactly how much you need to repay and when. You might think that you know this or that you can guess but it is wise to check with the lender. This is because it is not always easy to calculate or we might forget to add on some of the fees or all of the interest. It is best to make sure that you get it completely right.

See if You Have Enough Money to Repay

Once you know how much it will be then you will need to work out if you will have enough money to repay it. You will need to start by looking at how much money you expect to be coming in when you get paid. Be sure to make sure that you allow for any changes in salary you might get. For example, if you have different amounts of pay depending on the length of the month or things like that. Then you should think about whether that will be enough to cover the loan. Do not stop here though, you need to also have enough money to cover all of your other essentials as well. For example, you might need to pay rent or mortgage, have other loan repayments to make, pay utility bills and mobile phone contracts and there will also be food to buy as well. This means that you have a lot of things to consider and you need to add up all of those costs to see if you have enough to cover it. Even if you do, it can be a good idea to have a plan for raising a bit more just in case. If you do not have enough, then you will definitely need a plan for raising a bit more.

Reduce Spending

One way that you can get some extra money is to reduce spending on other things. To start with, it can be a good idea to not buy anything that isn’t essential. So, cut out all of those treats so that you will be able to use the money for essential things. It can be hard to do this, but it will only need to happen until you sort out your finances so just think of it as delaying buying things rather than depriving yourself. You also could benefit form comparing prices on the things that you are buying> Think about whether you can switch to cheaper brands, retailers, insurers, providers etc and spend less on what you are paying for so that you can reduce what you are spending even more. Even if changes you make will take too long to have an impact immediately, it can be worth doing as it might mean that you will then have less need to borrow in the future.

Increase Earnings

It can be a good idea to also think about whether you can earn a bit extra. This could be as simple as doing a few extra hours in your job or you might be able to take on a second job or some freelance or temp work just to get a bit extra to help out. You might also be able to sell things you own and no longer need to raise a lump sum of money or perhaps monetise your hobby somehow. It is good to have a good think about the possible opportunities that are available to you and you might find that you can raise quite a bit of extra cash.

What are Payday Loans for?

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There might be some people that are not really sure what payday loans are for. They might wonder whether they are designed to cover the cost of specific things or they may wonder whether there are certain things that you cannot use them for. It is a good idea to think this through though. This is because if you need to borrow money, you will need to choose the right sort of loan for your needs. Unless you know what different types of loans are for, you will not know whether you are picking the best one for your needs.

What Can They be Used for?

There are actually no specific things that guaranteed payday loans have to be used for. With some loans, they have a specific purpose. For example, if you take out a mortgage, then it can only be used for a house purchase. With a payday loan the lender will not specify what the money needs to be used for and they will not check what you are buying with it or ask you what it is for. However, there will still be limitations on what you can buy with it because of the features of the loan.

Limitations

  • Amount you can Borrow – with a payday loans you will only be able to borrow between £100 and £1,000. This means that you will not be able to use it to buy significantly expensive things. So, if what you need costs more than £1,000 then a payday loan will not be suitable for you. It is also worth noting that you may not always be able to borrow this much money either. If you have not used the lender before, they may only want to lend you a small amount of money. This is because they lend to people even if they have a poor credit record. So, they will want to build up trust with the borrower first and will therefore want to lend them a small amount and make sure that they will be able to repay that before lending them more. This means that you may only be able to borrow a few hundred pounds. This can therefore, really limit what you can spend the money on and so it might not be a suitable loan in situations where you need lots of money.
  • How Long you Borrow it for – a payday loan will only be for a few weeks or days. You will be expected to repay everything you borrowed plus the interest and fees on the next day that you get paid. So, if you need money for longer than this then it will not suit you. Also, you will need to make sure that you will be able to afford to repay that lump sum. Make sure that you carefully check your household finances to see whether you will have enough to cover it. You will need to think about how much you get paid and whether that will be enough and also whether you will then have enough money left to pay all of your bills and other essentials as well. If you borrow a lot of money, then this will be harder. It is really important to make sure that you can do this though. This is because you will find that you will get extra charges if you do not repay on time. Even if you do repay and then struggle to pay other bills you will get charged by those companies instead. Therefore, it is so important to make sure that you check carefully that you will have enough time to repay the loan on time and in full.