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Are Payday Loans Just for Those with a Poor Credit Record?

There are lots of assumptions that people make about different types of loans. It is a good idea to make sure though, that these are right. This is because if you need a loan at any time, you will need to make sure that you pick the loan that suits you the best. As there are so many different types, it can be easy to pick the wrong one. Therefore, if you make sure that you know about the different loans and what they can provide for the lender, it will allow you to make the right choice when you need one. So, you may know a little about payday loans, such as the fat that they are for those with a poor credit record, but it could be worth knowing a bit more so you know more about who they are actually for.

Bad Credit Record

It is right that those people with a poor credit record are likely to be able to use a payday loan. Many people with a poor credit record will be turned down for a traditional loan. This is because a lender will feel that they cannot trust them to repay the loan on time because they have not been able to do so before or they have missed payments on other things. A payday lender will not worry about this, in fact these loans were set up for people who struggle to get a traditional loan, so that they are able to still get financial help if they need it. However, the loans are not exclusively for these people as the lenders will not check and will be happy to lend to anyone. Of course, if you do have other loan options, you will want to make sure that you compare them all to find the best one for you. There may be other features that payday loans can provide for you though, that other lenders will not be able to.

Need Money Fast

It could be the case that you need money really quickly. Sometimes we have an emergency and need to find money fast. With a payday loan, you will be able to get money quickly, sometimes within a few hours. This is much quicker than many loans which could take a lot longer to arrange. Lenders will vary though and if you do need money extremely quickly, then it is worth checking with lenders before you apply to make sure that they can get you the money when you need it. Although this will take time, it will be worth it because otherwise you could end up applying for something and finding that it takes longer than you expected and it is too late when you get the money that you needed.

Quick to repay

A payday loan has to be repaid quickly. This can have advantages for those people that do not like the idea of being in debt for long because they will get it repaid quickly. The whole debt, which includes the money that you have borrowed and the fees and interest will all have to be repaid when you are next paid. This could be just a few weeks of even days form when you took out the loan. This means the loan will be very short term which people could really like. However, it does mean that you will have to come up with a lump sum of money quickly and so it is important to make sure that you check first to make sure that you will be able to repay it. The repayment ill come out on the da that you are paid, but you need to check that there will still be enough money even after you have paid for the other things that you need to pay for and it will leave enough to keep you going until the next pay day.

How do Payday Loans Work?

As payday loans are not offered by traditional banks, it is often the case that people do not know how they work. It is important tough, to have a good understanding of all types of loans because it will help you to be able to decide which loan will be best for you when you need to borrow money. There are lots of different loans and getting the right one is important because it means that we get better value for money from the loan if we get the one that suits us the best. Also, we might have requirements, such as needing a certain amount of money, that not all loans will be able to fulfil. Therefore, it is wise to find out how payday loans work.

How Much Can I Borrow?

A payday lender will often offer borrowers between £100 and £1,000. This is a fairly small amount compared to some lenders but it can be handy to know that there is a lender that will let you have manageable amounts that are not too daunting with regards to repaying them. It is worth noting though that if you are a first time borrower you may not be able to borrow too much. This is because lenders will not do a credit check and so they will need to build up trust with customers in other ways. They will therefore just lend them a few hundred pounds to start with and if they pay that back successfully, they will then be happy to lend them a higher amount of money.

How Long do I Borrow for?

A payday loan will not last for long. The idea of the loan is that you have some money to keep you going until you next get paid and therefore you will have to repay the money on your next pay day. This could mean that you will only borrow the money for a few weeks or even just for a few days. This can be really handy for those people that do not like being in debt as it will not last for very long.

How Quickly Can it be Arranged?

As payday loans are designed to help put in emergencies, then they are often arranged very quickly. There are some lenders that will get you the money within a few hours of applying. This will vary between lenders though and so if you do need the money really quickly, you will need to check with the lender to see how long they take in order to make sure that you will get the money on time. There are also some lenders that will be open all of the time, so at weekend sand overnight and that can be handy if you need money at those times. Not all will offer this though so again it is something that you will need to check out before deciding on the specific lender that you are going to choose.

How Much Does it Cost?

A payday loan can be more expensive than some other types of borrowing. This is because they will lend to people who have had financial problems in the past and are therefore taking a risk. The people they lend to are more likely to not be able to afford to repay the bad credit payday loan and therefore they charge everyone a bit more money so that they can cover the costs of those that do not repay. As with everything that you buy, you will need to think about whether you feel that the loan with offer you good value for money and this will depend on how urgent your need is for the money.

Will Credit Scoring Ever Matter to me?

It can be easy to think that credit scoring is not something that is important to you and that you do not need to worry about it. However, it is important to have a good understanding of who might use your credit score and then you will be able to make a decision as to whether you should be looking after your credit score and making sure it looks good or whether it really does not matter.

Lenders

Most lenders will take a look at your credit record to see whether they think that they can trust you to repay the loan that you want to take out. They will look for evidence that you have repaid loans in the past and that you are capable of making the regular payments that are required when repaying most loans. You may feel you will not need a loan, but many people make use of credit cards and overdrafts and also use money to buy a home. Therefore, it could be very useful to have a decent credit score so that you can borrow when you need to. There are some lenders that will not be concerned with your credit history but what you can borrow form them is limited. Some only lend small amounts and others will need a guarantor if you want to borrow higher amounts. You will also find that they are more expensive than conventional lenders.

Insurers

Most people have insurance for various things, such as to cover items we own, cars, phones, houses, general possessions etc. With some insurance you have the option of paying monthly or annually. Paying annually tends to be cheaper but it can be more difficult to do as you will have to find a lump sum. Therefore, paying monthly could be easier for a lot of people but it will not be offered as an option to those people that the insurers do not feel they can trust to repay it. This may even mean that some people will not be able to take out insurance at all.

Utility Suppliers

Utility suppliers might insist that people who have a poor credit report have a pre payment meter fitted. This means that it is necessary to pay for electricity and gas in advance. This might not sound like a problem but it is because pre paying can be more expensive and these customers are often not offered the same deals as other customers.

Landlords

If you are looking to rent a property, you will find that the potential landlord will want to check to see whether you are capable of paying the rent. This means that they will want to see that you have been keeping on top of payments and repayments and that you do not have lots of loans which could indicate that you will be able to manage the rent. If you have lots of loans then they may worry that you will not have enough money left to pay the rent.

Employers

Some employers will look at your credit record. Most will only check it to check your ID but others will be interested in your credit record. For certain jobs you will be handling money and they will be wary of people that have a lot of debts as they might feel that they will be tempted to take some of the money they are handling. Obviously, they will realise that most people are not thieves and can be trusted but it could still be a factor that might put them off, particularly if there are a lot of applicants for the job and others have a good credit report.

How to Repay Credit Cards

If you have a credit card, then you will have a certain credit limit. You will be able to spend a certain amount of money on the card without having to actually repay it. The credit card issuer will then send you a statement each month and will tell you how much you have spent on the card and how when it needs to be repaid by. They will also let you know how much interest you will be charged if you do not repay it and you will still have to pay a small amount which will cover the interest payments and a small amount of the outstanding balance. Unfortunately, if you only repay this amount it can take years to repay the credit card and you will pay out a lot of money in interest. If you continue using the card, you may end up not repaying it at all. You will therefore be much better off coming u with a better plan to repay the card so that you repay it more quickly.

Stop Using the Card

it is wise to stop using the card so that you do not keep adding to the debt. It can be so tempting to use it, especially if you have paid a bit off so you can see that there is money available for you to use again. It is therefore wise to put the card away somewhere so that you cannot use it. You can even ask the card issuer to put a hold on the card so that it cannot be used and this could be particularly useful for those people that know their card number off by heart or have it programmed in to certain ecommerce sites so they can use it even if it is out of sight or cut up.

Pay More than the Minimum

If you want to start making a decent indent into the debt each month then you will need to repay more than the minimum amount. It can therefore be worth setting up a direct debit that will pay a but more than necessary. Even if this is just a tenner extra, it will mean that the card is repaid more quickly and that you will end up paying less interest. Of course, the more you can pay, the better, but just starting off with a small amount is worth it. Make sure it is a manageable amount and then you will be able to commit to paying it and know that you will also be able to manage everything else that you need to buy as well.

Find Additional Ways to Top it Up

It is a good idea to see whether you can find other ways to pay more money off the card. You will be able to pay lump sums of money against the balance that you owe and so it is worth trying to get some and whittle down the amount that you owe. It might be easier to do this than you think. It will be a case of either finding some ways to earn a bit more money or spending less or both. So, there are lots of possibilities if things that you could try. The easiest is probably to compare prices on things that you buy and make sure that you are not paying too much. If you reduce the amount that you are paying for things it means that you will be able to spend less and use that money towards paying off the credit card. It could also be wise to think about the items that you are buying and whether you really need them. It is a good idea to question yourself when you are about to buy something and think about whether it is really necessary. This could help you to buy less, spend less and have more money available for repaying the card. Earning more could also help you, so think about whether you can do some freelance work, temp work, sell thing you do not need or things like this to get some more money.

Is my Choice of Bank Important?

It is not always easy to know whether you are picking the right bank to use. You might just stick with the same one and it is much easier to do this, but it could be that there are other banks available that are better suited to your needs. Therefore, it could be a good idea to think about what you like and dislike about your bank and then see whether there are any better options.

Likes and Dislikes

It is worth starting by actually making a list. List down the things that you like about the bank that you are with and the things that you do not like about them as well. This is a great starting point because you have thought about the obvious things. However, if you have only banked with one or a few banks, then there might be a lot of things that you are not aware of with regards to what a bank can offer or be like. This means that you might be limited by this and so it could be good to also chat to others about it as well. Try to find some people that are not with the same bank as you and ask them what they like and dislike about their bank and see what the reveals. They might say something like they like having a local branch as the staff are really helpful and friendly and that might get you thinking about the fact that you don’t have a local branch and so cannot benefit from that and perhaps it might be nice to have a bank that does.

Likes and dislikes are very personal though and so you will need to think about the things that others have said and consider whether you think that they will be important to you or not. You might also want to gather information online as well and it could expend your thoughts with regards to what you might be looking for in a bank.

Options

You may end up feeling quite happy with the bank that you are with and feeling that they provide you with everything that you are looking for. However, it might also be the case that you have found out that banks are offering things that yours does not or just generally sound better. Then you will need to start thinking about what to do. If you do decide to switch banks, you will need to decide whether to switch everything over to another bank or whether to move some products to different banks. It is important to be aware that you do not have to have everything with the same bank. You may find that the one that has the best current account may not have the best savings account or might be expensive to borrow from. So do not think that you have to use the same bank for everything. It can be a good idea to compare banks for different products.

Of course, it might be what the lender is like that is more important to you, but often people will also be concerned with the cost of the loans or the amount of savings interest they can get as well. They may look at these alongside what the bank is like and use them to conclude whether it offers good value for money or not. This is something that it is good to think about, consider whether you are happy with the money you are paying out for the loan considering what you are getting back, for example. Some people will be happy to pay out more money if it means that they get a better service, whereas for others the money is the most important factor and the service is less important to them. You will need to therefore think about your requirements and it could even help to prioritise so that you can decide whether to change banks and if you do decide to change, which bank or banks will be the best suited to your needs.