You never know what’s just around the corner – a broken down car, an expensive vet’s bill, or an urgent home repair – which is why exploring options for financial help when you need it most is essential. Payday loans can help if you’re faced with an emergency that your income will not stretch to cover. Read more about this finance option below.
What are payday loans?
You may have heard of payday loans – but how much do you know about them? They are different to the most traditional types of loans, such as bank loans, as they tend to be offered by online lenders, and are paid back typically in a month – on your next payday. Payday loans are a short-term solution that should only be used when suffering from a financial emergency, for example, a broken boiler, or an urgent car repair that your monthly wage cannot stretch to cover.
Applying for a payday loan in an emergency means quick access to cash, with funds arriving in your account in as little as 24 hours depending on the lender you choose. There are a variety of payday loans you can choose from, like same-day loans, 24-hour loans, and loans for bad credit. Let’s take a closer look at some of the benefits that you may find when applying for a payday loan.
What are the benefits?
Here are a few advantages to consider when considering applying for a payday loan:
- Fast access to cash: This is one of the main benefits that comes with this type of loan. Unlike other types of options, short-term and payday loans can be deposited into your account in just 24 hours – even faster in some cases! This is particularly helpful when dealing with a time-sensitive emergency.
- Bad credit options: Unlike the most traditional types of loans, payday loan lenders consider borrowers of all backgrounds, whether your credit score is less than impressive, or you’ve struggled to pay your bills in the past. A decision will be made on your ability to pay back the loan, rather than your credit score.
- Help when you need it most: If you’re struggling to make ends meet, you may have nowhere to turn, and being faced with an additional, unprecedented cost can cause unnecessary strain on your bank balance and your mental well-being. Having access to payday loans means you can apply for funds to help you manage in an emergency.
Applying for payday loans
When applying for payday loans, there are a few steps to take to ensure you’re making a decision that is right for you and your finances. First, you should consider if you have any alternative options before taking on more debt. Once you’ve determined this, work out how much you need to borrow, and ensure you don’t apply for more than you need – this results in the loan becoming more expensive. From here, you can start looking for lenders to suit you. Make sure you complete your application correctly, as this will speed up the process. You may also be asked a few details, like your address, bank details, and proof of income so your lender can ensure you are able to make the repayments.
Factors to consider
When applying for a payday loan, there are a few factors to consider to help you make an informed and responsible decision for your finances, such as:
- Interest rates: These rates directly impact the cost of your loan. Interest rates will be determined depending on how much you’re borrowing and the period over which you are paying it back. Because payday loans are short-term and come with an option for bad credit, interest rates tend to be higher. Make sure you calculate the total cost of the loan by adding interest and other fees onto the total you’re borrowing.
- Repayment requirements: Payday loans are typically paid back on your next payday, which is a short amount of time to find the money to pay your lender what you owe. Make sure you’re aware of when you need to make repayments to avoid damage to your credit score.
- Financial responsibilities: Before choosing a payday loan, think about other financial responsibilities you may have. For example, taking out a payday loan may be one of your only options, but if you’re already struggling to manage your debt, this might make your situation worse. Think about whether you are able to fit more debt repayments into your monthly budget.
