If you need to borrow some money, then you may feel that you are rather restricted in choice. There are many options but there may be reasons why those options are limited. Even if you have a bad credit record or need money really quickly, it may not mean that a payday loan is your only choice, but even if it is, it may not be as bad as you think.
What alternatives are there?
It is always best to start, when considering a loan, by thinking about what the money is for and whether borrowing is really necessary. Consider whether the item that you are buying is an emergency purchase or something that you can wait for. If you can wait, then it is far better to do everything you can to pay for it yourself. You may be able to cut back your spending, earn more, sell things or use savings rather than having to borrow. These will be far cheaper, easier and they should be less stressful as well.
If you have no choice but to get a loan, then look at all of your borrowing options. Even if you have a poor credit record, there might be other options outside of a payday loan. There are other poor credit loans and there may be other options too depending on how bad your credit report is. Do make sure the credit report is all correct as any mistakes may be causing it to look worse than it should. Applying for loan and being turned down does make your credit report look worse so try to avoid this. It is better to contact a lender and ask them what chance you have of being accepted for a loan, before formally applying. You may find, even if you do get accepted, that you will be charged more than the advertised rate due to your credit report showing you as being a higher risk. Check before you apply so that you can look at the costs and decide whether you think that it is worth it.
How to make a payday loan work for me
If you decide to take out a payday loan then you may worry about it. There has been a lot of bad press about them, but if you use it carefully then it could be very much to your advantage. Firstly, make sure that you borrow the minimum amount of money. All loans will charge depending on how much you borrow and how long for. So, if you can borrow as little as possible, then it will be cheaper. Also only take the loan out when you have to. Even waiting a few days will make it cheaper and as they can be arranged very quickly, then you can leave it until the last possible minute to organise. But do check with the lender of your choice how long it will take and have everything in place ready.
Once you have the loan, you will have a date as to when you need to pay it off. The lender will set up a direct debit for the payment to leave your bank account when you get paid. Make sure you know how much this will be and when you will have to pay it so that you can prepare. In the mean time make sure that you do everything that you can to minimise your spending and maximise your earnings so that when it comes to payment day, you will be able to afford that repayment. You will also need to be careful beyond this day as you will need to continue to manage until you next get paid, with less money. It can be wise to set a budget and plan all of your spending really carefully. Make sure that you include everything that it is essential that you pay for and cut back on everything else. It can be tricky and feel like you are being punished but it will only need to happen until you are more easily able to afford things again.
Payday loans get expensive when payments are missed and that is why it is important to make sure that you repay on time. Even when you do, the fees are higher than other types of loans because of the extra risk the lenders are taking in. So, if you can borrow the smallest amount possible for the shortest time possible then you keep costs down. Making sure you can repay in full is very important and if you can repay any early you will save money too.
So, a payday loan may not be your only choice. It is worth thinking about any other options available to you as these could be cheaper or easier for you. If you do have to take a payday loan, make sure that you are careful and then you will not have to pay more than necessary.