Many people do worry about taking out loans because they are concerned about repaying them. While it is right to make sure that you are capable of repaying it, as long as you do your research carefully, you will reduce the risk that you will not be able to repay the loan. Payday loans have often been reported as being problematic in this area and it is not surprising that this has put people off using them. However, they are no different to other loans with regards to the risks of not being able to repay, you just have to make sure that you are confident before you take one out.
How do payday loan repayments work?
Payday loans work slightly differently to conventional loans with regards to how they have to be repaid. They are not repaid in instalments, which is usually the case with other loans, but you have to repay them in one lump sum. This is set up by direct debit so that you do not forget to make the repayment. You will have this direct debit set up so that the money will leave your account on the day that you are paid. This will enable you to be sure that the money will be available to pay for it. The fact that you have to repay the whole loan plus the interest and charges in one go, is something that some people find tricky. However, as long as you plan carefully and borrow an affordable amount, this should not be a problem for you.
How do I make sure it is right to take one out?
It is therefore wise to start by looking at your financial situation. You will obviously be in a place where you need some money, which is why you are contemplating a loan. However, it is important to look beyond this and think about what money you have coming in and what you tend to spend. This will allow you to find out how much you will have available to repay when you do borrow. Of course, it might be that you will be able to reduce your spending by buying less or buying cheaper things so that you will have enough money or do some extra things to earn more. However, you do need to think about this really carefully.
How do I ensure I can pay?
With a direct debit set up, the money will leave your account, but you will need to ensure that there is enough money there to cover the loan. Make sure that you borrow an amount that you are confident that you will be able to repay. Once you have looked at your bank statements you will have an idea as to how much you will be able to afford. If you have decided that you will need to spend less or earn more to be able to afford it then make sure you start working on this right away. You need to identify where you are planning on spending less and immediately work on that by cancelling subscriptions, switching supplier or retailers and things like that. You might want to stop going out to shops or visiting online retailers where you are likely to spend money as well. If your plan is to earn more then also get straight to it thinking about what you will do and organising those opportunities. It might be that you plan on doing some overtime which you will need to set up, freelance work which you will have to arrange or online work that you will have to look for. You might decide to sell things so you will have to get them ready for sale and decide where to sell them. Make sure that you do not procrastinate and that you do more than necessary to ensure that you have enough to repay the loan. It is worth remembering that you will be likely to only have a few weeks before the loan will need to be repaid so you will not have long to get organised. It might be that doing overtime will be too late as you may not get the pay for that until the following month, so make sure that you check. Also, looking for other work might take too long before you find something or before you get paid for it. Therefore, make sure that you think things through really carefully and make sure that you are completely sure that you will have the money when you need it. If it is a case of spending less, then perhaps leave your debit card or purse at home so that you cannot spend money even if you want to. You might need to be more organised, such as not doing unnecessary journeys so you do not have to fill the car up so often or taking a sandwich with you to work so that you do not have to buy one.