When You Should Not Consider a Payday Loan

Applying for a payday loan is an important event, and although in most cases will have the positive impact as intended. It can also end up with negative ramifications if you are not fully prepared for your repayment obligations over the coming weeks and months. Most payday loans are taken out between £50 and £10,000, with the repayment terms beginning after one week, running up to 3-months of instalment payments, depending on the type of payday loan you take out, your own personal financial circumstances and other issues. Remember, that a payday loan taken out with a responsible lender, from one of the new wave of reputable payday loan companies, and with a clear and transparent view of the payments expected, will help you to resolve your short-term financial issues.

You should always take careful consideration over a potential loan. Even if you are only looking to take out a payday loan for a few weeks, and for a small amount of money, always look at your current finances in depth, all your incomings and outgoings, and work out how much you can afford to pay out each month towards paying back a loan or any other form of credit. If you will be overstretching your budget and left unable to pay your rent, bills, or for food, then taking out a loan is a bad idea.

If you will be placed in further financial difficulty by taking out a loan, and potentially missing payments (racking up greater interest and further fees as a result), you should instead think cleverly and save up money, or ask friends and family if you can borrow money from them, as an alternative. Always be wary that the overall cost of a loan of any kind will include interest on the initial sum, application fees, as well as potential missed payment fees.

When applying for a payday loan your credit score should not be affected, as long as you demonstrate the willingness to make repayments on time, every time, but some companies do look at whether payday loans have been taken out by an applicant. So if you are looking to get a mortgage in the near future, it might not be worth the risk of getting a payday loan, or any loan, if you feel there might be a risk that you cannot make the repayments as agreed.

As with any type of financial products or credit, taking out a payday loan will only work for you if you are fully prepared for it. There are now a wide range of responsible lenders on the market who are in a great position to help you out of a short-term financial bind. There are restrictions and obligations attached to them, of course, including high interest and fees, but if you are fully prepared and in the right position to take it on, they can help you out enormously in the short-term, and won’t affect your credit score adversely either. Always make sure to read the small print when looking to take on any financial product or service.