Four Things To Think About Before You Take Out A Payday Loan

As we all know, money has a habit of running out and usually at the same time that expensive and unexpected costs crop up. Unfortunately there is no such thing as an endless money pit which means that at times we are made to seek ways of easing cash flow problems. Some people apply for text loans as it is a very viable way of solving temporary financial issues but with any kind of personal finance product, there are some important considerations first:

1)      Is there another option?

This may seem like an obvious question but often there are other alternatives to taking out a loan. Friends and family, if they are in a position to do so, are often only too glad to help someone who has fallen on hard times. Also, simply cutting back on a few unnecessary expenses can free up a fair amount of cash over the course of a month (or even a week). Ask yourself, “Do I really need that daily coffee at £3 a go?” The answer is probably not.

2)      How much money do I need to borrow?

The temptation when taking out a loan, whether it’s a conventional loan or a short term loan like pay day loan lenders are offering, is to borrow more than you actually need. Sadly, this is a sure-fire way to lead yourself further into debt but it is easily avoidable; do your sums, work out exactly how much you need and don’t borrow above this.

3)      Do I qualify?

Every loan provider will have their own application criteria so where you may be eligible with one company, you may not be with another.

To qualify for most loans, you must usually meet following criteria:

  • A UK resident
  • Over 18
  • Employed
  • Earning £500 or more per month
  • The owner of a bank account with a debit card

4)      Can I repay?

Before taking out a payday loan, you need to consider whether you will realistically be able to make the full repayment on your next payday. The full repayment is the amount borrowed plus a loan charge and be aware that all loan providers will have different fees.