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.