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.