How To Take Out And Manage Payday Loans Responsibly

We can all hit a financial emergency from time to time and while some are sufficiently prepared with the likes of emergency savings, others aren’t quite so lucky. In these cases, an unsecured loan can provide financial relief in a true emergency, but knowing how to take out and managing these payday loans securely is vital. From ensuring that this is your only choice, to making sure that you prioritise the payments, here is our guide to taking out and managing payday loans.

Take A Moment To Consider What You’re Borrowing For

Before you go searching for payday loan lenders, you need to understand what you need the money for and whether it really constitutes taking out a short-term loan. This will, of course, be a matter of your own personal situation more than anything, but there are a few reasons that will cause most lenders not to even look at your application form. If you’re taking out a payday loan for an impulse buy, any potential investment opportunities, a monthly bill that could otherwise be postponed through talking to your provider or anything that could wait until the next month aren’t worthy of payday loans. Unexpected medical bills, vital household breakages or simply because money is extremely tight that month are reasons that most lenders will accommodate for.

Only Take Out What You Can Afford

With that in mind, if the money that you need exceeds what you can realistically afford when your next payday comes around, a payday loan is not the right solution. Most payday loan lenders will agree a period of up to 12 months for your repayments, but with interest rates, paying this back on time and in full is a must and if you can’t do that, you likely can’t afford the loan in the first place.

Shop Around

Once you’ve determined the amount you need and what you need it for, it’s time to find a lender. Brokers can do the search work for you in some cases, but ensuring that you’re getting the best deal and the best rates for what you need and your current credit score state could help you save potentially hundreds during the duration of your repayments. Utilising payday loan lenders that are FCA approved will ensure that you’re never paying more than double the original amount of your loan, and the FCA can protect you in the case that this regulation is broken.

Prioritise Debt Paybacks

When it comes to paying back your payday loans, you may need to prioritise this debt where possible. High-interest loans will build up much more quickly than 0-interest or low-interest alternatives and so if you are in a position in which you have extra cash to spare, directing this towards your payday loan repayments could help reduce the overall amount you’ll pay back.

Get Help If All Else Fails

If you’ve followed the above steps and are still finding that you are struggling with the repayments, seek professional and expert help. Lenders are required by law to direct you to free debt advice if this is the case, so utilise this service as soon as you need it. Non-profit organisations often provide help for free with the sole purpose of helping you get out of debt, so it’s worth taking a look to see what help is available in your local area or online.

Payday loans can be an effective solution in a financial emergency, but ensuring that everything is being paid back on time and in full can prevent potential penalties. With the above tips and professional and expert advice, taking out a short-term loan could be manageable providing it is done with care.

Posted in: Personal Finance

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