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Will a Payday Loan be too Risky for me?


There are many fears that people have with regards to borrowing and with payday loans they seem to have even more. It can be easy to worry, for example, that they are too much of a risk and should therefore be avoided. There are risks associated with them, as there are with other loans, but if you consider each one, you will be able to work out whether those risks are likely to relate to you. It is worth asking yourself a few questions and this should help you to decide if the risks are too great.

Can I Afford it?

All loans have a cost and it is worth thinking about the cost of the loan and whether you can afford it. This is because when you pay back the loan you will not only have to repay what you borrowed but there will be fees as well. These fees can be high, it depends on what type of loan you have, how much you borrow and how long for. Payday loans do have a reputation of being expensive which is due to the fact that they take risks by not doing a credit check. They cover the cost of these risks by charging more than other lenders. However, if you have a poor credit record and cannot borrow any other way, you need money quickly or you feel this is the best loan for you, then you may feel that the cost is worth it. One way to look at it is to think about the cost of the loan and add that onto the cost of the item you are buying with the loan and think about whether you would still buy that item if it cost you that much.

Can I Repay it?

It is really important to think about whether you will be able to afford to repay the loan. This is something which can easily be forgotten when you are considering borrowing money. It is so easy to focus on the money that you are getting and how much it will be helping you and forget about the fact that you will need to repay it plus interest. Find out how much you will need to repay and consider how you will manage it. Payday loans are set up so that the full repayment is made on the day that you get paid. This means that you repay the loan and interest all in one go. Although this means that the burden of the loan disappears quickly, it can mean that it is difficult to make the payment. Although you are paid that day and theoretically should have the money, if other bills also go out that day or you have had an overdraft to repay, then you may not have enough there to repay it. This means that you could be in trouble. Make sure that you take a look at your finances and that you are confident that you will be able to do it.

Can I manage after it?

It is easy to forget about managing after that repayment. It could be a large chunk of money that is going out of your account at the start of the month. You will then have to manage to pay for everything else with what is left and this may not be anything or a very much smaller amount than you are used to. It is well worth checking your bank statements and working out how much this will be as you will then be able to work out how much you will have to manage on. There might be ways that you can help yourself, perhaps by spending less on more luxury items, but you will need to have a plan in place. Make sure that you know exactly how you will manage your money before you take the loan and then it will not be such a risk.

Although it is not possible to eliminate every risk when you are taking out a loan but it is well worth thinking about what the possible risks are and doing what you can to reduce them. You should be able to find out exactly what you will have to repay and when with the payday loan and this will allow you to calculate how well you will manage this. It is worth spending the time doing this and then you will know whether taking the loan is a good idea and it will help you to know if it is too risky or not. You may regret it if you find that you get into trouble, either with repaying the loan itself or managing your money afterwards and so it is best to be sure beforehand. It should not take that long to do the relevant research and calculations.

Should I use a Payday Loan to Pay my Electric Bill?

A payday loan can be used for all sorts of things, but you may wonder whether there are things that you should and should not use it for. For example, should you use a payday loan to pay your electric bill?

Why use a loan?

There are lots of people that borrow money and for all sorts of reasons. However, some people do not borrow wisely and some people do. It is worth understanding and thinking about whether it is a good idea to use a loan in this situation.

If you need to pay an electric bill then it is important to pay for it because you could get cut off otherwise and therefore there is no way to avoid it. You may be able to speak to the supplier though and ask them if you can delay paying or pay in instalments if you are struggling to pay it. You should also think about whether you have any savings that you can use to pay it. Some people do not realise that the interest paid on savings is far less than what can be charged on a loan and therefore it is normally better to use the savings rather than a loan to pay for things. If you have no savings and cannot defer the payment then borrowing might be your only option.

Find the right type of loan

It is really important to make sure that you are finding the right type of loan and the right type of lender to pay it with. There are many different ways to borrow and it is important to make sure that you use one that suits your needs the best. Some loans have specific purposes, they will lend varying amounts of money, they will have different repayment schedules and things like that. Therefore, it is important to find the right type of loan. Understanding how a payday loan works could help you.

A payday loan will lend you anything from a few hundred to a thousand pounds for a few weeks. You will be required to normally repay it in full plus charges on your next payday. There is no credit check so you do not have to worry if you have a poor credit record and they can be arranged very quickly so if you need the money really quickly, they can be ideal.

Make sure you can repay it

With all loans it is important that you will be able to repay them. This is something that is easy to forget when getting out a loan. We can be focussing on getting the money and spending it on the thing we need, such as paying the electric bill in this case. It is easy to forget that we need to repay it. Of course, with the payday loan you will need to repay it very quickly. A direct debit will be set up for the payment t leave your account on your next payday. You may think that this will mean that you will be guaranteed to be able to repay it and that will be it. However, if you have other bills that go out first there is the possibility that you might not have enough money left to cover it, so you need to be really careful. You may know that you will still have enough even if the other bills come out first though, so this may not worry you.

Make sure you can manage other expenses

It is also really important to make sure that once that bill comes out, that you will be able to manage all of your other expenses in the month. Consider that once you have paid off the loan you will still need to cover all of your costs for the rest of the month. This will include the regular bills that you always pay, food and then any extras on top. You will have to budget carefully to make sure that you can manage to do this or else you could end up finding that you will need a loan to make ends meet at the end of the month.

So, there is no reason why you should not use a payday loan for an electric bill in theory. However, it is really important to have a think about whether that is the right solution for you. You need to consider the implications of taking out a loan with regards to the cost of it, how you will repay it and how you will manage when you have made a repayment. It could be a good solution but you need to be completely sure that it will work for you. Also, once you have decided to take this sort of loan, you need to be careful to compare them so that you find the best one for you as there are lots to choose from.