Payday loans are undoubtedly making lives easier. Who doesn’t like instant cash with fewer complications involved? People in the UK most certainly do! According to a 2012 statistical report prepared by the Office of Fair Trading, £1.8 billion in payday loans are lent by payday loan lenders. Deciding whether to opt for a payday loan or to go for a conventional loan from a financial institution requires a methodical approach from the borrower’s end. The process involves an in-depth evaluation to figure out the pros and cons of the decision and if the payday loans is the last resort to solve a financial crisis at hand. So, how do you make the decision?
Here is a list of 5 questions we believe everyone planning to apply for a payday loan must consider asking themselves.
Do I Need The Money Right Away Or Can I Wait?
The reason this is the most important question is because there is a significant difference between a bank loan and a payday loan. For starters, if you believe that the money can wait, a conventional bank loan, by all means, is the best option for you. Now what do we exactly mean by ‘money can wait’? If you plan to buy a new car in a few months or are planning to move into a rented apartment, you will need to have some money in the bank to pay the first instalment. Since you aren’t moving right away, you have 3 different options to consider; save up, take a payday loan or apply for a conventional bank loan.
In such a circumstance, taking out a payday loan is useless as they have more interest rates as compared to conventional loans. However, if you are faced with an emergency and you can’t wait for the bank’s approval to issue you the loan, a payday loans will be your saviour. Why? It’s because it is instant cash and doesn’t have a comprehensive approval and waiting time.
If I Take A Payday Loan Now, Will I Be Able To Repay In The Given Timeframe?
Before you decide to move forward with your decision to take out a payday loan, it is important that you take your future financial condition into consideration. Most lenders expect the first payment of their loaned money or in some cases, all of their money plus interest when the borrower receives his/her next pay check. This leaves the borrower with a 2-week timeframe on his/her hands. Many a times, some lenders also ask borrowers to leave them with a blank check to hold on to so that when the given timeframe is up, they can and deposit the check from your bank.
Don’t take a payday loan if you think you won’t be able to repay it in the given time frame or can’t repay it at all as it is will badly reflect on your credit report, making it difficult for your to borrow again in the future and drown you into further debt.
How Good Or Bad Is My Credit?
It is common knowledge that conventional banks don’t loan to people with a bad credit report and charge them with high interest rates in case the loan gets approved. Bad credit is going to hurt your aptitude to secure a conventional loan, leaving you with only one option left – payday loans. The ease with payday loan lenders is that they rarely check your credit history. Even if they are a little suspicious about your credit score, they still approve the loan. Therefore, for whatever reason your credit score doesn’t look good on paper, a payday loan will save the day.
Can I Trust My Lender Completely?
Knowing if you are working with a reliable and trustworthy lender is also important. It is your duty to conduct a thorough research on your end and put your queries in front of the lender when applying for a payday loan. There are as many scammers online as there are reliable ones. Therefore, before filling out the application form for a payday loan, ensure that the person or firm you are sharing your personal information with is reliable. Don’t trust companies or lenders who ask for a fee upfront in order to process your payday loan as they are most definitely con men. So, how can you know who to trust and whom not to?
Read reviews, ask for referrals from friends and co-workers who have previously applied for a payday loan and look for companies with a sound market reputation and have worked with and processed loans for thousands of clients.
Do I Need A Solution As Simple As Payday Loan To Resolve My Financial Situation?
Answering yes to this question means you need to look no further than a no-fuss payday loan. Think about it; you won’t have to gather documents, worry about your bad credit score on your credit card or live in the dilemma of whether your loan will be sanctioned or not. Additionally, lenders won’t worry about you having a job or steady income or the fact that you are a teenager. So, if a simple solution is what you are looking for, a payday loan is the best option for you.
Lastly, whoever plans to get payday loans must only lend from those lenders who have a well-known and operational website, have market repute and allow lending after they have matched borrowers with suitable lenders. The transaction must be guaranteed to be safe. Always remember that getting a payday loan is a big decision. It may work out for you in the short run but if you fail to pay back the promised amount plus the interest amount, you will end up with more debt on your hands, with the actual reason of borrowing in the first place becoming redundant.