If I have a Poor Credit Record is a Payday Loan my Only Option?

If you want a loan and you have a poor credit record, then you may worry about your lack of options and whether a payday loan is the only option that you have. It may not be the only option and even if it is the only option it need not be a bad option.

Alternative options

Just because you have a poor credit record it does not necessarily mean that you will only be able to get poor credit loans. It is worth taking a methodical approach to find out what your options are. To start with you need to make sure that you really need the loan. If you have savings use those and if you can wait then save up money instead as it will be far cheaper. If you cannot do this and a loan is the right option for you then start by checking your credit record. Ensure that everything on it is correct as mistakes could lead to your report being more negative than necessary. If there are mistakes then get the companies involved to change their records and also ask the company who produced the report to also change it. It sounds like a hassle but could make a significant difference. If you can get your credit record looking as good as possible it could mean that you will be able to get more choice when it comes to loans. There are some lenders that will also let you know if you would be accepted for a loan through them without this appearing on your credit report. This can be really helpful as every time you get turned down for a loan it will show on your credit report and put off other lenders.

Payday loan option

If you feel that the payday loan will be your only option then there are things that you can do to make sure that it is a good option.

  • Compare lenders on price It is really important to compare the different lenders and see how much they will charge for a loan. You will see that there are big differences between them and so if you can pick one which is cheaper, then you will not have to pay so much. There may be other factors that you want to think about as well as price of course, but price is usually a very important concern for many borrowers. Make sure that you compare the AER as this includes all costs rather than just the interest rate. Also look at any charges they might have for late payments. Although I am sure you will hope to repay on time, it is good to be prepared for these costs and use them as a way to compare lenders.
  • Borrow the smallest amount that you can Make sure that you do not get tempted to borrow more money than you actually need. This can be easy to do if you feel that you would like something extra, many people might like to take the opportunity to treat themselves. However, every penny you borrow will be charged interest on so the more you borrow; the more expensive it is. Therefore, you need to be really careful and borrow just what you need and no extra. You need to remember that you will have to repay it in a lump sum and this will be harder if you borrow more.
  • Ensure you can repay It is so important to make sure that you areconfident that you will be able to repay the loan when you need to. A direct debit will be set up on your pay day so that you should have the money available, However, if you have other direct debits going out on that day, then you will need to check to make sure that there will still be enough money available. It could be wise to cut down on your spending from the time you take out the loan, so that you can be sure that you will have more money available when it is time to repay it.
  • Ensure you can manage after repaying This extra money will also be useful once the loan is repaid as you will have to then manage until you next get paid with that chunk of money gone. Think about whether this will be possible for you and what you might be able to do, with regards to spending less and earning more, to make it easier for you.

So, if you plan things carefully then a payday loan could be a good option for you. Be careful to make sure that you are aware of how much you will need to repay and when so that you can prepare yourself for that big chunk of money coming out of your account. Check that there will not only be enough to pay it but also enough to cover the rest of your expenses and well.

Is a Payday Loan for Anyone?

Many people have ideas about certain types of loans being for certain types of people. It is true that loans can be designed with specific purposes in mind and this could include the type of person that they may appeal to. With a payday loan they were designed for certain situations, but it should not mean that others should not consider using them. It is worth researching them along with other loan types if you want to borrow money so that you can find out if they are right for you. They have some advantages over others –

  • No credit check – most lenders will check your credit report and decide whether they feel that they can lend to you. This can be fine if you have a good credit report but if you do not, then it could mean that you get turned down for a loan. If you are turned down then this is noted on your credit report and can then put off other lenders. A poor credit report can be due to you having unpaid bills or outstanding debt or it could be because you have not had any credit and therefore have no record of repaying it. Either way, it can make it difficult to borrow and therefore having a loan option where no credit check is done can mean that you will be much better off.
  • Arranged quickly – a payday loan can be arranged very quickly. Some can be arranged in a few hours and even done outside of normal business hours. They do vary though, so you would have to check to make sure this was the case, if you need the money this quickly. This means that if you need money in an emergency and have no other way to get it, then this could be a good option for you. There are other ways to get money quickly, such as a credit card or overdraft, but they have to be applied for and this can take time. Once they are set up, then they are always there for use to use if needed.
  • Very short term – a payday loan is a very short-term loan. This means that if you want to get a loan that is repaid very quickly then it could be a good option for you. Some people would rather have a loan where they can borrow money and repay it fast. This loan insists that you do this, which means that you have to repay this way and this can be the sort of force that some borrowers will want. A payday loan will have to be repaid in full when you next get paid. In fact, a direct debit is set up so that this happens. You will need to be careful to make sure that there will be enough money available to cover this payment, as you may have other direct debits going out on that day as well or your pay may be late. Ensure that you protect yourself against a non-payment as the charges for this can be extremely high.

So, whether the loan is right for you will depend on what you need from your loan. It is so important to think about that when you are considering a loan. Make sure that you know how much you need to borrow, how quickly you want to repay it and how much you can afford to repay. You will then be in a position to choose a loan that will suit your needs by matching it to your requirements. Obviously, most people will also be looking at the cost of the loan. This is an important factor. Make sure that you calculate the full financial cost of the loan and also factor this in when you are deciding. You will find that different lenders will vary in how much they will charge for specific sorts of loans so by comparing them you could find that you will find some that are a lot cheaper. Do be careful to look at all the costs, not just the interest rate though. There may be additional fees. You may also be wise to look at the charges made for late repayments and things like this, just in case you have to pay those. Some cheaper lenders may charge significantly more here and so it is worth being aware of this. As well as the cost though, make sure that you consider the lender as well. Consider their reputation and how good their customer service is so that you know if you need help from them they will give it to you. In order to check you could always contact their customer services department yourself and see how well they respond to your queries. It may seem like a lot to do, but it is worth it if you get the best value for money that you can from the loan that you choose.