The Do’s and Don’ts of Payday Loans

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Payday loans are an incredibly useful and convenient means of getting your hands on a lump sum of cash as and when you need it. There’s an abundance of lenders on the market today offering between £50 and £1,000 over 30 days or until your next pay day arrives and it just goes to show as over 1.2 million people applied for a loan in 2009, borrowing around £1 billion pounds.

Because payday loans are so quick and convenient, it can be easy to not follow the same type of best practice procedures you would normally follow when applying for more standard forms of credit, for example: personal bank loans, credit cards and store cards. In this article we would like to remind you of some basic things you should do and some you shouldn’t when you apply for a short term loan online.

Do

Shop around

There are a huge number of short term loan lenders online today. You’ll no doubt be tempted to grab whatever you can and apply for the first loan you see: don’t do it. As with most things you apply for or purchase online, it’s always more beneficial to shop around and get the best deal. The amount of effort you put in to researching lenders could pay you back in dividends when you finally fill out that application form.

Take note of the APR

As standard in the UK, payday loan lenders are obliged to display their APR whenever they advertise or offer their services to the public. When you apply for your loan, it’s important that you take note of the interest you will be charged over the 30 days and if you have time, shop around to find the best deal possible.

Repay your loan on time

Although payday loan lenders offer help to people with a poor credit history it doesn’t mean that they are slack when it comes to repayments and although applying for a loan won’t affect your credit rating, not repaying it on time can.

Don’t

Use Payday loans to pay off other payday loans

Payday loans are intended as a short term financial aid, if you’re struggling to repay your previous payday loan at the end of the month you should never consider taking out another loan to repay it – you’ll no doubt end up spinning out of control inside a nasty spiral of debt and bad credit. Contact your lender immediately if you’re struggling to meet your agreed repayment date.

Lie on the application form

If you feel your situation is really the pits and you don’t think you’ll be able to get a payday loan it’s understandable that you’d think about lying on the application form – although it may seem like a good idea at the time, we can assure you it’s not. Payday loan lenders will almost certainly verify the information that you supply them and if they find out you’ve made a fraudulent claim (which they probably will) they’ll deny your application and undoubtedly flag you on their system as a no-go.

Borrow more than you can afford

Before applying for a payday loan it’s vital that you take a step back and assess your current financial situation. Ask yourself the following questions:

  1. Can I afford to repay this when I get my pay cheque?
  2. Do I really need this money today or can it wait until the end of the month?
  3. Have I read and understood the interest rates and repayment dates?
  4. Are there any other forms of credit available to me?