Making the Most of Short Term Payday Loans
As the end of the year draws ever closer, many people will be looking for ways that they can supplement their income; be it to get the Christmas shopping done on time, or just to make sure that they have enough cash left over to cover the bills.
It’s no surprise that millions of people in the UK will look to take out payday loans over this holiday season. With so many companies promising to offer the best interest rates or the quickest, easiest applications, it can be hard to say no!
Short term payday loans are exactly that, though. They aren’t designed to be a method of long-term lending, which is why it’s important for consumers to understand exactly what their loan means, or how they can make the most of it.
Here are a few tips and tricks that can help you to cut down on costs or save yourself a bit of money, so that you can really make the most of your cash.
Shop Around Before you take out any type of loan, it’s very important to shop around. Different lenders will all offer different rates of interest, or may even add in additional charges – in order to make sure that you’re getting the best deal, you do need to compare loans.
There are a few ways that you can compare lenders: from comparison sites, money-saving forums or even by just researching the APRs of individual loans yourself. These can take a lot of time, though, and may not be the most accurate way to see how different products compare.
Alternatively, you can make use of Loan Bird’s free-to-use service! We will automatically seek payday loans from over 50 different providers, making sure that you can benefit from some the cheapest loans on the market. Let us take the hard work out for you!
Understand what type of loan you need
This one might sound obvious, but many loans are advertised in similar ways – this can often blur the lines between each available product, potentially making it difficult to tell which one will benefit you the most.
There are so many different types of short term credit available: bad credit loans, no credit check loans, payday loans, guarantor loans… the list goes on.
Whilst each of these do have distinct differences, it can be very easy to mix them up. It’s important to understand exactly which type of loan will benefit you the most. This can end up saving you more money in interest costs, charges or even just due to the duration of the credit agreement.
A payday loan is best suited for situations in which you need immediate access to funds that you KNOW that you can pay back in full by your next payday.
Only take a loan out if you can afford it!
This one might sound counter-intuitive…
We don’t mean that you should only ever take out a loan if you have the cash available already, otherwise there wouldn’t be much point in borrowing money! All we mean by this is that you should make sure that you can definitely make the required repayments on the agreed date of each month.
It isn’t uncommon for people to take out a loan, tempted by the idea of quick cash, even if they know they won’t be able to pay it back in time. Not making your repayments will cause you to incur further charges, or may make it so that you won’t be able to obtain credit in the future.
If you’re planning on applying for a payday loan, you should ensure that you’ll be able to repay the balance in full within a month, unless the terms of your agreement state otherwise. In most cases lenders will also give you the option to extend your borrowing period.
You probably shouldn’t take a loan out for something that you don’t need
We know how important it is to keep up to date with the latest gadgets, electronics, apps and trends. When you see these things constantly advertised, it can be difficult to steer away from the temptation to make a purchase, and with so many quick, easy and affordable loans…
As a rule of thumb, you should avoid taking a loan out for any unnecessary purchases – if you didn’t need it before you heard about it, you probably don’t need it now!
There are situations where your phone might suddenly stop working, or your car could just break down unexpectedly – as these are essential items that you couldn’t live without, you may need to replace or repair them immediately.
However, if your gadgets are in perfect working order, or if you’re only looking to upgrade them because the next generation has been released, you might be better off saving the money yourself.
Manually saving the money can allow you to completely avoid any charges, application fees or interest costs – in fact, you might actually be earning interest depending on your saving account!
Pay it back earlier if you can
One way that you might be able to save a bit of cash is by repaying your loan back earlier than the agreed date. It’s no secret that payday loans generate a higher interest payment than traditional lending products, but did you know that by clearing the balance early, you may be able to significantly reduce the total amount of money you’ll end up paying back?
Many lenders will charge daily interest amounts based on the total (remaining) outstanding balance. Put simply: the longer you maintain a balance on a loan, the more interest you’re likely to pay.
If you run into a bit of money, or if your payday falls before the agreed repayment date, why not consider making the payment a few days earlier than planned. You might end up saving yourself some cash or giving yourself a bit more peace of mind for clearing the loan early.