Payday loans are short term (1-2 weeks) loans that offer quick cash to people in a tight financial spot. It can be tempting to get them when you’re facing a cash crunch, but you must look at all of your options so you make the best decision possible. That’s why I put together this handy guide on six things you must know about payday loans.
Borrow only what you can afford to pay back
Trying to borrow money that you won’t be able to pay back can be very stressful and may lead to financial hardship in the long run. This is especially true if you are already in debt. However, if you find yourself in a situation where you need money quickly and can’t easily ask friends or family for help, it may be worth considering a payday loan.
Payday loans are often used to pay for unexpected expenses like car repairs or medical bills that can’t wait until the next paycheck arrives. However, people who take out payday loans often use them for everyday expenses or to pay off their credit cards. This is not recommended because taking out a payday loan places an even more significant burden on your monthly finances. If you already have a credit card balance and need cash, it makes more sense to call your credit card company and ask them to lower your interest rate while you make payments on the principal balance.
Documents you will be asked to provide
Having some papers with you is essential when applying for a payday loan from lenders like Paydayloansonline.co.uk. Here are some of the documents that you need to have when applying.
Identity proof – this could be your driving license or a passport. You can also bring your National Identity card, but it is unnecessary since it doesn’t prove your identity in the UK.
Proof of Residence – this should either be a utility bill or bank statement. If you don’t want to show it, you can add a friend who will vouch for you as someone who lives in their house.
Payslips – just like the ones that we have at work, but employers should give them to employees at the end of every week or month.
Understand what you need the loan for
It is crucial to recognize the primary purpose of any loan. After all, it is clear that you need money at a time when you have none. The process of applying for a payday loan UK will be much easier if you understand what you are doing.
Payday loans are not designed to help someone get out of debt permanently. They are designed as short-term solutions that do not provide any long-term solutions to financial problems. Therefore, before applying for a loan, you should ensure that your financial situation will allow you to repay the loan in 30 days or less.
If your financial situation is such that it would take longer than this to repay the loan, it is better not to apply. If possible, it is better to borrow from friends or family to solve your temporary financial difficulties.
What makes a payday loan different from a personal loan?
A personal loan is a short-term loan that helps you bridge the gap between your income and expenses. It is usually unsecured and has a fixed amount that you need to repay after a fixed period. The interest rate for this type of loan is usually higher than that for a credit card but lower than that for other loans.
Payday loans are usually for small amounts, from £100 to £1,000. If you need more money than that, you’re better off applying for a personal loan. Personal loans offer longer repayment terms, usually with fixed monthly payments over several months or years. Personal loans don’t require collateral and have lower interest rates.