How to Use Payday Loans to Your Advantage
Payday loans represent one of the most convenient and quickest ways to borrow some money when you face an emergency before your payday. Such necessities occur for medical expenses, events like birthdays, holidays or even priority bills that might be higher than normally.
Just like with all other types of loans, payday loans require attention. Here’s what you need to know to use them sensibly, with no unexpected problems.
Keep an eye on your budget
Just because a particular lender is willing to give you $2,500, it doesn’t mean you have to take all of it if your income is $1,500 only. On the same note, you don’t need the whole amount if you only need $300. It’s useless to get it all, and it will put you in even more debt.
When after direct lender loans, it pays off knowing what kind of budget you have. Come up with a monthly budget before even applying. Get a piece of paper and a pen and write all your income, in a realistic way.
If your income has lots of overtime income, don’t include it. Overtime is optional, and you may no longer have it next month. If you do, it’s just extra money, but in theory, it shouldn’t be included when preparing a budget.
Once you have the income, get all your expenses in. Include bills, fuel, grocery expenses, random nights out, restaurants, socializing money and so on. Believe it or not, there are times when drafting a budget can prove that you don’t necessarily need a loan, but just the option to lower your expenses.
Check out more types of credit
Direct loans are more diversified. From all the available options out there, payday loans serve the widest demographic. You only need a source of income and a bank account, as your credit score doesn’t matter at all.
But then, there are other options and people in different circumstances may have different needs. For example, you could research credit line options too, not to mention credit union loans or perhaps a credit card, yet they usually come with higher interest rates.
Indeed, payday loans are more convenient and faster, but it’s worth knowing all of your options.
Be honest about it
Honesty goes in two directions. Don’t lie to your potential lender, and more importantly, don’t lie to yourself. If your budget has an issue, don’t lie to yourself, thinking that you’ll work it out. It doesn’t work like that. Instead, you have to fix it. Skip restaurants for a month, or forget about going out.
It’s just as important to be honest to your lender. An application barely takes a few minutes, but make sure you don’t overestimate or underestimate things. You could still get accepted, but an unaffordable loan will cause even more trouble in the long run.
Lenders are willing to help, but they try to do it responsibly. It’s in their interest, as well as your interest, to be able to repay the loan on time. Otherwise, it’s an unnecessary hassle for them and extra expenses for you.
Compare your options
There are two ways to find payday loans.
- Finding lenders and researching deals yourself
- Using a comparison site that works like a broker
The first option takes time. You’ll have to work on different deals, do the math, count fees and expenses, see potential terms and conditions and so on. It will take at least half an hour for each lender you research, and there could be hundreds of them.
Besides, you may not even be aware of all the lenders, especially if this is your first payday loan. You could miss out on some amazing opportunities. Just because you find a lender willing to give you the money in a few hours, it doesn’t mean that’s the best deal.
The second option implies completing one application only. The respective portal will take it through multiple lenders and return the ones more likely to accept it, as well as terms, prices, fees or interest rates. It’s easier to find a good deal. Once you decide, you’ll finish the application on the official website.
Responsible repayments
Another important thing to remember is you need to be responsible with your repayments. Make sure automatic repayments go through. You can often make manual repayments too if your wages come at irregular times. Otherwise, just stick to the next day.
Failing to pay on time or getting payments delayed can add fees and extra expenses. If a deal looked great when you took it, it may no longer be that good if you get hit with all kinds of fees.
Bottom line, payday loans can and will offer a fresh breath of air, but you need to use them sensibly. Indeed, they’re easy to get and convenient, but they require a responsible approach. Dragging payments will no longer be in your advantage, so ideally, stick to what you can repay on payday.
