UK Finance Blog

If you have not had a payday loan before, then you may assume that they are not for you. It is good to have an understanding of payday loans and who they are for so that you will know whether they will be right for you or not.

Who were they designed for?

To start with it is good to understand about the origins of payday loans. They actually came about as there was a poor selection of options for borrowers who had a poor credit record. The lenders saw that there was this need for borrowing from these people and so created a product that they could use. These payday loans had no credit checks which meant that it was possible for anyone to apply for a loan. This means that if you have a poor credit rating it means that you will still be able to get a payday loan if you wish.

Who can use them?

This might make you feel that you can only get a payday loan if you have a poor credit rating. It is true that you can get one if you have a poor credit rating, it does not mean that the loan excludes anyone that does have a good credit rating. So, whether you have a good or poor credit rating you will still be able to use the loans. In fact, there are only a few things that could disqualify you form getting a loan. These could be your age; as you have to be over 18, if you are not resident in the UK, if you do not have a bank account; as you need to be able to set up a direct debit to repay the loan and if you do not have a regular income to repay the loan.

Are they right for you?

It is important to think about whether they will be the right loan for you. The work quite differently to many other types of loans and so you may find that they are the right option for you. Firstly, you borrow a small amount of money which can be much more manageable for many people. You will also have to repay it when you next get paid. Not only does that mean that you should have the money available to make the repayment, but the loan will not last long and so you will not have the worry of having a loan hanging around for a long time. The loans are also very quick to arrange. You may even find that you will have the money within a few hours. This therefore means that they are really suitable for anyone who needs money in an emergency. Even if you have a good credit rating and can get money elsewhere, the speed of these might be so good, that you will choose them above other types of loan anyway.

It is important, to therefore think about what you need in a loan and whether the payday loan will suit your needs. You need to consider the purpose of your loan, how much you need to borrow, how long you need to borrow it for, whether you can afford to repay in one lump sum, how you feel about being in debt, what you r credit rating is and how quickly you need the money. This should help you identify whether the payday loan will be the best type of loan for you and your needs.

Do make sure that if you have decided to go with a payday loan that you need to compare the different lenders as well. They will all differ in the way that they do things so the cost, customer service and things like that will all be different. Do some research so that you can find out which will be the most suitable for you. It is good to spend a bit of time doing this if you can, as it can make a big difference. Ask people you know if you can, as they will be the best to make recommendations as they will have no reason to be biased and want to help you to find the best lender that you can. If you cannot ask them or would rather not discuss finances with them then you could look online. Make sure that you use trusted sites and that you are sure that the reviews are genuine. Also make sure that if there are ratings, that you think about why the ratings are the levels they are. If there is a review with the rating take a look at it and you will be able to see whether the person was displeased with things that are important to you or things that you do not really care about.

If you are interested in payday loans or considering whether to take one out or not, you may wonder whether they are suitable for everyone. You may wonder, perhaps whether they are suitable for you because you may not feel that you fit the criteria. In fact, payday loans are probably suitable for most people. It is good to make the loans work for you though. This means that you should take advantage of them rather than letting them take advantage of you. There are a few things that you can do to make sure that they do work for you.

• Only borrow what you need – it is always wise to only borrow the amount of money that you need. Although this sounds obvious there are many people that will borrow a bit extra. They may feel that they will be able to enjoy a few more things if they have extra money. Perhaps they want to treat themselves or just have some extra money so they do not have to struggle to manage. However, it is worth trying not to do this. It is good to remember that you will have to pay money for every penny that you borrow and so if you can keep the borrowing to a minimum then you will owe a lot less money and it will be cheaper and be easier to repay. If you are still tempted then calculate how much more you will have to repay if you borrow more. There should be a calculator on the lenders website where you can do this calculation. Look at how much extra you will have to repay and think about whether you can afford this and whether you think that it will be worth it, considering the extra that you will have to pay.
• Borrow for the shortest time possible – As well as borrowing extra money, borrowing for extra time will also cost you more. It is therefore worth making sure that you do not borrow for more time than necessary. Only take out the loan when you really need to. So if the loan takes a few hours  to arrange and you need the money in a week’s time; make sure that you leave it for five or six days before you take out the loan and you will reduce the cost of the loan because you will not be paying that extra five or six days interest. You may not think that it will make that much difference. It is wise to therefore use the calculator non the lenders website, as above and you will be able to calculate the difference in cost between borrowing money right away or waiting for the five or six days until it is much closer to when you need it.
• Repay on time – like any loan, you will need to repay it on time. If you do not manage to do this, then you will get extra charges and so the loan will end up costing you more money. It is therefore important to make sure that you have enough money to be able to repay it on time. It should be set up to be repaid on the day that you are paid, so you should have enough. However, you will need to make sure that there are not other payments going out of the account which will mean that you end up being short of money and unable to repay the loan in full. You may need to be careful with what you are spending before that payment comes out. It is wise to make sure that you are aware of how much you need to pay and how much you have so that you are not at risk of not repaying it on time.
• Repay in full – it is also important to make sure that you repay in full. If you manage only to repay part of what you owe then you will have charges to pay. This could mean that the loan will end up costing you significantly more money. This is why it is so important to make sure that you have enough money to be able to afford to pay it.
• Make sure you can manage after the repayment – it is also really important to make sure that you will be able to manage once you have made the loan repayment. It is great to make sure that you are able to repay it on time and have all the money available to do so. However, you need to also think about all of the other things that you need to buy as well. Consider whether you will have enough money to cover all of your other essentials too. You will probably have rent or mortgage to pay as well as utility bills and food. There will probably be contracts and transport to pay as well and insurance and other things. There are many things that we commit to paying or buy and need to make sure that we have enough money for. It is important to calculate whether you will be able to manage these before you sign up for the loan.