Is it Easy to Repay a Payday Loan?
There are many rumours about payday loans and the way that they work. If you are not familiar with them, it can be easy t be put off trying them. However, you could find that a payday loan will be really suitable for you and so it is worth making sure that you know how it works so that you are able to decide whether it will be useful for you. One big question that you might have is whether you will be able to repay the loan. It is an important question because if you cannot repay any loan there will be consequences. Not only will you be charged extra, but it will also have an impact on your credit score. Therefore, it is important to make sure that you can repay it.
How do payday loan repayments work?
A payday loan repayment is different to other loans as you have to make the repayment in one lump sum. This means that you will have to find a lot of money in one go compared with other loans where you will often spread the repayments over a number of months or even years. As the loans are not for that much money (only up to £1,000) this means that you will have less to repay in total compared to many other types of loans and this could make it more manageable. However, you still need to be sure that you will be able to manage.
To make it easier, the payment is set up by direct debit on the day that you are paid. The direct debit means that you will not have to remember to repay it, it will be done automatically. The fact that it is on the day that you are paid, means that you will have more money available to repay it. However, if there is not enough money to repay it, the lender will keep trying to take the payment until it all gets repaid and there will be charges if it is not available when it is first requested.
How can I work out if I can afford it?
This means that it Is really important to make sure that you are able to afford the loan. Then you will be able to avoid getting a fine. Firstly, you will need to make sure that there will be enough money to repay the loan on the day that you are paid. Find out how much you will be expected to pay by using the calculator on the lender’s website. If you enter how much you want to borrow and how long for, then it will let you know how much you will need to repay in full. This will help you to calculate whether you can cope with a repayment. You need to look at how much you are paid and what other costs will go out of your checking account on the day that you are paid and make sure that there will be enough to pay it. Make sure you allow for any overdraft as well as that will be paid before anything else. Then you also need to consider whether once that loan is repaid, if you will be able to cope with paying everything else you need.
What to do
It is wise to think about whether you might need to cut back your spending or earn more in order to cover the loan. If this is the case, then make sure that you plan this carefully before you take out the loan. If you can, cut back more than you need and earn extra and then if an unexpected expense comes along you will be able to afford it. Cut out all unnecessary spending and just buy the things that you have to. Try to earn more money by doing extra hours or doing extra work elsewhere. You might even be able to sell some things to raise some extra money. Think carefully about what will be practical for you to do. Make a plan and write it down so that you can follow it. Make sure that you feel confident that it will work and that you will be able to follow it.
If you borrow a small amount that you will be able to afford without making any changes then it will be easy to repay the payday loan. If you borrow a large amount and have to work hard to spend less and earn more in order to afford the loan then it will not be so easy. It will also be a matter of opinion. Some people will find cutting back on spending a lot easier than others. It partly depends on whether you spend a lot of money on luxuries that you can do without for a while or whether you are already struggling to just pay for the basics that you need. Some people also find spending money a lot harder to give up than others. You should know where you fit and therefore how hard it will be for you to manage.