Loans come in various forms such as credit cards, personal loans, car loans, home loans, etc., but payday loans are different. They are generally very short-term loans with high rates of interest that are to be paid back as soon as the person who took the loan receives his/her pay after the loan amount got credited. There is no denying that they can be extremely helpful in a situation where you need some immediate cash, but it is still worth taking note of the following points before you finalise the decision.
Is the Amount Too Big?
The best part about taking a payday loan is that despite charging high rates of interest, the interest rate never really piles up on you like it does in case of long-term loans. However, since payday loans need to be paid back immediately after you receive your salary, it might take a significant chunk out of it at one go.
So, the bottom-line is, you should not take a payday loan which is so big that it creates a financial crisis once the amount plus interest is deducted from your account. Doing that could potentially push you towards into debt, so be careful with the amount you borrow if you feel this is the only route available to you.
Ask for an Extension if You Must
If for any reason, you find yourself to be unable to pay back the entire sum within the next payday, ask for an extension officially, instead of just skipping the payment. You can usually get an extension up to next four paydays to return what you owe, instead of one. In most cases, you will not even have to pay any additional fees for taking the extension. But like anything to do with owing money, if you bury your head you are going to make it 10 times worse so please tackle any issues head on.
Make Sure that the Reason is Worth It
While payday loans can help solve an immediate financial crisis, it is always worth taking some time out to think about the reason why you are taking it in the first place. Payday loans are usually not supposed to be big enough for you to get a new car or a house because of their short-term nature and they do charge a fortune in interest. Therefore, your reasons should mostly centre around emergency situations such as medical needs or some other unexpected expense that you have to cover.
Go through the Terms & Conditions
Always go through the applicable terms and conditions before signing up for the loan and make sure that you are dealing with a legitimate and registered money lending company like CashFloat and not some shady organisation disguised as a credit company. Do not be discouraged if you have a bad credit score or you cannot procure a guarantor because those are irrelevant when you are trying to get a payday loan form CashFloat.
Now that you know the areas where you need to focus on before actually applying for a payday loan, you can finally make an informed decision. In any case, since payday loans are not generally very big ones, they are not as risky or draining as big, long term loans.