How Much Should I Borrow With my Payday Loan?

When you are looking to getting a payday loan, it is important to borrow the right amount of money. You will be offered a certain sum, but you will be able to take less than this if you want to. However, if you borrow too much or too little there will be consequences and so it is important to get the amount right. It can be tricky calculating this amount but it is possible.

Problems of borrowing too little

If you borrow too small an amount of money then there is a risk that you will not have enough to cover the purpose that you need it for. This is a problem as it means that you may then find that you will want to borrow more money so that you can manage and this would mean taking on two loans which could make repaying difficult. Alternatively, you may find that you will not be able to take on a second loan once you already have one as there are restrictions on payday lenders and they are only allowed to let you have one loan at a time.

Problems of borrowing too much

Borrowing too much may not seem like a problem when you first consider it. It could feel like it will be good to make sure that you have enough and possibly a bit extra just in case. However, the down side of having too much I that you will have to pay extra in interest when you are repaying it. You pay interest on everything that you borrow and so if you can keep this to a minimum then you will pay less.

How to decide

It is therefore worth working really hard on deciding what you should be doing with regards to how much you want to borrow. It is likely that you have a specific thing that you want to pay for that you need to borrow for and this will determine how much you will borrow. However, it is worth thinking about whether you have any money that you might be able to put towards the cost of it, perhaps some savings or some spare money in your current account. Also think about the money that you might have left in your current account and whether you can use some of that. It is really wise to make sure that you spend some time actually working out all of the figures to make sure that you get it right. Get a few previous bank statements and your current balance. Look at what expenses you will have coming out between now and your next two pay days. Then you can work out how much money you will have and how much you need to spend and how much you need to borrow. It Is worth being very through with this because it is really important. You want to make sure that you are getting it right as it will help you to know exactly how much you need to borrow. It will also allow you to see how much you will be able to afford to repay which is an important consideration as well. You need to be confident that you will be able to repay the loan. It is worth thinking about how much money you will have available to do this and whether you think that you will be able to manage.

It can feel like a hard task – trying to work out how much everything might cost, how much money you might have and how much extra you can borrow. Then working out how much you will need to repay and whether that is something that you can afford as well. However, it really is worth it because it will allow you to be able to work out whether you can afford to repay the loan and if you cannot then this will mean that you should not be borrowing the money. Alternatively, you might be able to come up with a plan where you will be able to afford to repay the loan by spending less or finding ways to earn more. It is important that you think about this and come up with a plan before taking out the loan so that you are able to make sure that you know what you are doing and that you will be successful in repaying the loan.

So, it is really important to make sure that you do not borrow too much or too little when you are taking out a payday loan. You need to carefully work out how much you need to borrow and then check that you will be able to afford to repay that much. Have a plan on how you will manage and then you will be much more likely to be able to be able to succeed.

How Does a Payday Loan Work?

There are many people that still do not know how a payday loan works. They have not used one before and the fact that they do not know how they work puts them off being able to use them. It is therefore good to have an understanding of how the loans work so that we can decide whether it might be a suitable loan for us at some time.

  • Who are the loans for? – payday loans came about because it was noticed that those people with a poor credit record had no where to go if they needed to borrow money. Payday lenders do not do a credit check and this means that it is possible for anyone, regardless of the credit status to borrow through them. They are also able to arrange loans really quickly. This is partly because they do not have to take time doing a credit check, but they also often have staff available all of the time, even at weekends and nights to be able to deal with your application. It can mean that you will have money within a few hours. This means that the loans are also suitable for someone who needs money really quickly. They also only lend small amounts of money, which is something that might be hard to get with other loans which often lend large amounts of money. This means that you could end up borrowing much more than you need, repaying over a longer period and paying more interest if you use a different type of loan.
  • Application process – the application process is really easy for a payday loan. With some lenders you will be able to apply over the telephone and with some you will be able to apply online. The process is really easy and will not take very long. There is not a lot of paperwork to complete you will just need to give details of how much you want to borrow, when you need it, when you want to repay it and what you bank account details are and you will need to send some ID. Then you will just have to wait to find out if you get approved. Most applicant will be, you just need to have an income and a bank account, be over 18, be a UK resident and not have another payday loan outstanding.
  • Getting the money – within a few hours or days of application (depending on the lender) you will be sent the money. This is a lot quicker than you will get money form many other lenders and can therefore be a lot more useful, depending on how quickly you need the money.  It will be sent by direct debit into your nominated bank account, which will normally be the same bank account that the repayment will come out of. Then you will be able to use it as you wish. You might want to transfer the money to pay a bill or pay someone or draw it out as cash to buy something that way. It will be up to you how you decide to use it and as it appears in your current account it will be very easy for you to distribute it as you see fit.  
  • Repaying the loan – repayment of a payday loan is different to many other types of loan. You will usually repay it all in one g. A direct debit is set up for the repayment, which will include the amount that you have borrowed as well as the interest. This is set up to go out of your account on the day that you are paid so that there is a good chance that you will have the money available to repay the loan. It is important for you to make sure that this will be the case as if you have other direct debits going out, an overdraft to repay on that account or your pay is low, then there is a risk that you will not be able to repay. Just make sure that you calculate, before you apply, how much you will be able to afford to repay and find out how much the repayment will be, so that you are sure that you will be able to manage. It can be great repaying everything in one lump sum as it gets the loan over with really quickly. However, you do need to make sure that the amount that you borrow is an amount that you will be able to afford. If you do not pay, like with all loans, there will be additional fees and so you want to avoid these if you can my making sure that you will be able to repay when you are required to.

So, as you can see, a payday loan is rather different to other loans. However, the way that it works is very simple and it is something which is available for most people to be able to use.