You never know what’s just around the corner – a broken boiler, an urgent home repair, or a vet’s bill. Emergency expenses can have an impact on your monthly cash flow, leaving you wondering how you’re going to cover necessary costs. This is where payday loan direct lenders can help. Payday loans can be used to deal with unprecedented expenses that crop up so you can deal with them more easily. But it’s essential you use this type of finance responsibly. Read on to find out more about how to use payday loans and how you can build a stronger financial future.
Understanding payday loans
Before you can think about using payday loans responsibly, it helps to know more about what they are, and how they can affect your financial future. Payday loans are short-term loans that are usually paid back on the borrower’s next payday, typically in around 30 days. A payday loan is generally a smaller loan, ranging from around £100-£1000. They should only be used in a financial emergency, for example, if you’re faced with an unprecedented expense like a broken boiler or an urgent home repair that your income cannot stretch to cover, as the short repayment time can make them harder to manage.
One of the main reasons payday loans are a popular choice when faced with an urgent expense is that they’re available to those with bad credit. Lenders base their decisions on affordability rather than credit history, so even those with a low credit score can benefit. Failing to repay your payday loan in full and on time can have an impact on your financial future, and will be reflected in your credit score. Here are a few tips on using payday loans responsibly.
Only borrow what you need
It’s essential to only what you need to cover your immediate expenses. Whilst it can be tempting to borrow more money than is necessary, this will only make the loan more expensive, including added fees and interest. Make sure you work out exactly how much you need to borrow to pay for your expense, and only apply for that amount. This will allow you to reduce the overall cost of borrowing, and allow you to manage your debt more easily.
Repayment plan
Payday loans have a short repayment term, usually around 30 days depending on the terms set out by the lender you choose. This can make it more difficult to plan for repayment, as you cannot split the payments over several months like you can with other types of finance. Because of this, working out how you’re going to pay off your payday loan in such a short amount of time before you apply is essential.
Be sure to prioritise your loan repayment – look at your monthly budget and decide if there are ways you could cut back, and use the money saved to put towards your loan repayment. Missing a payment can have a negative impact on your credit score and financial stability, so ensure you budget correctly.
Choose a reputable lender
It’s important to choose a reputable lender that offers high-quality customer service when applying for a payday loan. To benefit from a loan to suit you, make sure you research and compare online, and read reviews and feedback so you can get a clear idea of what to expect from your lender. Make sure the lender you choose is regulated – this should be stated on their website – and ensure all information is presented to you clearly and in a way that you understand. You should also consider using lenders with live chat options, so you can get help if you need it. This will help keep your finances safe from predatory practices, and allow you to make responsible decisions.
Alternative options
When choosing a payday loan, it’s essential to consider whether you can afford it, as failing to meet your repayment requirements can have consequences when it comes to your financial future. If you’re concerned you won’t be able to make payment when required, you could consider other options. Check if you’re eligible for government benefits to ease your financial hardship, reach out for help from charities for information on the next steps, or ask family and friends for help if you’re struggling. Simply exploring other options could be advantageous, and may save you from falling into financial difficulty.