When you are looking between different loans it can be hard
deciding which will be the best for you. Most of us know a lot about
conventional loans but perhaps know less about payday loans. This is because
they are fairly new and less people tend to use them. It is good to make sure
that you know a lot about it so that you can decide whether it is a good choice
for you or not.
How do payday lenders select borrowers?
It is good to start by understanding how borrowers are chosen for payday loans. Then you will know whether it is a loan that you might be selected for. Many loans have strict criteria for borrowers and this can be off putting for many who decide not to bother applying. This can be partly because they do not want to go through all of that bother if they will be turned down and partly because they know that being turned down will have a negative effect on their credit score. However, payday lenders have a very different way of choosing borrowers. To start with they do no credit check and so your credit score is totally irrelevant to whether you will be picked for a loan. This means that far more people are chosen for payday loans. The only restrictions tend to be if they are too old, are not US residents, do not have a checking account or an income. This only cuts out a fairly small proportion of people and so there is a good chance that you will be accepted for one.
How much can you borrow with a payday loan?
The amount that you can borrow will vary between lenders. Most payday lenders will offer up to around £1,000. This means that the amounts are small making them more manageable. A first-time borrower may not be able to borrow that much though. Lenders will usually offer less to first time borrowers to see how well they repay it before they allow them to borrow larger amounts. This is the way that they can build up trust with borrowers, particular as they do no credit check. If you require more than a few hundred pounds, you may need to contact the lenders directly to see whether they will be prepared to lend you the amount that you need. They will vary in their approach and so you may find that some will and some will not.
How do you repay payday loans?
Repayment of a payday loan is different to other loans as you repay it in one lump sum. This means that you pay back the amount you borrowed and all of the interest and fees in one go. This can be great because it means that you get rid of the debt all in one go. The repayment will take place on the day that you get paid. This means that you should have more money available to repay the loan and you will therefore be more likely to be able to manage the repayment. It is still important to check and make sure that you will have enough money to do this and that you will be able to manage to pay for everything else that you will need as well. By checking statements form your checking account, you will be able to see whether you think that you will be able to afford to do this. It should allow you to work out how much you can afford to borrow.
Is a payday loan a good loan for me?
Whether a payday loan is good for you will depend on what you are looking for in a loan. When we decide that we need to borrow some money, we will all have different reasons for this, different amounts that we need and different ideas on how we want the loan to work. It is wise to think about what your criteria are and then you will be able to find the best loan to suit your needs. It is always good to make sure that you are confident that you will be able to repay the loan when necessary. It may be that certain methods of repayment will suit you better than others. It also good to understand exactly how much the loan will cost. Then you can decide whether you think that it will give you good value for money. It is worth making the decision as to whether you really need the loan based on this. You will need to decide whether you think it is worth paying the cost of the loan to get what you need the loan for. It is a very personal decision as it depends what value you put on that specific item.
Many people are still not that familiar with how a payday
loan works. This is because they are reasonably new and many people feel that
they are not for them. If you know a little bit about the loan you might use
this information to assume that the loan is not for you. However, it is wise to
find out more about the loan and how it works so that you can decide whether it
will be a useful option for you. If you need to borrow some money, then it is
much better to have a full understanding of all of the options available to you
rather than just dismissing the options that you know very little about.
Who can have a payday loan?
With many loans there are restrictions on who can have them. This is something which can put people off borrowing as they assume that they will not be able to get a loan and therefore give up without really trying. They may also be aware that if you get turned down for a loan, this will show on your credit report and could put off other lenders wanting to lend you any money. However, a payday loan is different. They do no credit check and this means that the loans are available for anyone regardless of their credit score. You will also never be turned down due to your credit record and so there will not be the risk of this happening and reducing your credit score even more. This means that these loans are available for a lot more people than conventional loans and so it could be that you will find it more useful than others.
How much can you borrow?
A payday loan is for borrowing smaller amounts of money. It is usual for a payday lenders to lend up to £1,000. It can be useful for many people to borrow less money and so this loan could be handy. Borrowing a smaller amount also means that you will have less to repay and this can be extremely useful. It is worth noting though that lenders may not always lend the full amount that they advertise they can lend. If you have not borrowed from them before they may want to only lend you a small amount so that you can prove that you are capable of repaying before they lend you more. This means that if you want to borrow the maximum amount that they offer, you may have difficulty. However, these rules will vary between lenders and therefore it can be worth getting in touch with a selection of them as they may be able to offer you different amounts. Then you will be able to find out exactly how much will be available to you.
How do repayments work
The repayments for a payday loan work differently to other loans. The main difference is that there is just one repayment. This is great for those people who do not like the idea of being in debt and hope that they will be able to repay it really quickly. With just the one repayment it will not last for months or longer, like some other types of loans can. The repayment will take place on the next day that you are paid. This means that you are more likely to have the money available to repay it as you will have your salary available to repay it with. You will need to be sure that you borrow the right amount so that you will be able to repay it though. It can be wise to calculate how much you will have to repay so that you can check that you will have enough money.
How easy are they?
Payday loans are really easy to arrange. You may be able to arrange over the telephone or online and there is a minimal amount of questions to answers and information to provide. They are processed very quickly so you will know soon whether you have been accepted or not. You will also get the money really quickly. Often the money can be in your checking account within a few hours which means that if you need money for an emergency then this can be very useful. Many loans will take a lot longer than that. You could find that you are filling out lots of paperwork as well and so the whole application process takes longer and is more complicated. Then you might find that it will take a long time to wait before you find out if you have been approved for the loan and another wait for the money. This can not only be stressful but it could mean that you will have to wait too long to get the money and it will not arrive in time.