It’s recommended that we all have some savings to fall back on. Unfortunately, it’s not always possible. A lot of people are living pay cheque to pay cheque and find it hard to put extra money away each month. So, what do you do when you find yourself suddenly needing a big chunk of cash? If you have no savings to fall back on then you will have to look at other ways to get the money. This is where a payday loan can come in handy.
What is a payday loan?
A payday loan is a short term loan which is meant to tide you over if you’re having a money problem before payday. They often come with a higher interest rate than normal loans and the idea is that you pay them back as soon as your next pay cheque comes in. They often have a bad reputation, but they can be a lifesaver if you are in a struggle and you plan your finances before you get one.
When might you need a payday loan?
There are many different situations which may require a payday loan. Many people end up getting one when something in the home goes wrong and they can’t afford to fix it. For example, if your boiler breaks and you are left with no hot water or heating, you will want to get it fixed as soon as possible. Boilers are very pricey and you may not have the spare cash lying around to fix it. Or your car may break down and need hundreds of pounds worth of work doing to it. If you rely on your car for work, you really can’t leave it so a payday loan may be the best option here.
What are the pros of a payday loan?
- A payday loan is a quick way of getting money in an emergency situation. Many lenders are able to get the money into your account the same day that you apply for it, often with 1-2 hours of your application.
- Payday loan lenders are often very discrete. If you don’t want anyone to know you are struggling financially, then you don’t need to worry.
- There are some lenders that will consider bad credit ratings. So, even if you have bad credit you may be able to get some help in an emergency.
- If you have already had a payday loan and paid it back in time, you’re more likely to get another one. A lot of lenders will give you a higher loan if you have had one from them before and paid it back on time.
What are the cons of a payday loan?
- The main disadvantage of a payday loan is obviously the high-interest rate. Before you look into or apply for a payday loan, you need to make sure that you know that you can afford to pay it off after payday.
- Failure to pay your loan back on time will really affect your credit rating. Again, you need to make sure getting a payday loan is a viable option for you.
If you are thinking of getting a payday loan in an emergency situation, do make sure that you are checking the small print, or read reviews on a site such as LearnBonds. You will need to work out if you can afford to make the repayments. A payday loan is often the right option, you just need to make sure you can afford it.