There is a lot of talk about short term loans and whether they are something that should even be legal and also a lot of bad press about how people have taken out short term loans and got into trouble. However, there are people that have found them to be beneficial and so it is something that is very personal. The laws have changed to make them fairer as well and so this means that the charges are more reasonable. It is a loan though and all loans should be approached with caution and so you should consider a number of factors when you are deciding whether to take one out or not.
What is the loan for?
the first thing to consider is whether it is worth getting out a loan or not. Firstly, if you have savings then always use these before getting a loan as this will not cost you as much. You will lose the interest that you would earn on the savings but this will almost always be less than you will pay in interest on the loan. You also need to think about what you are buying with the loan and whether it is worth it. If you are buying something that you can wait for, perhaps that you can save up for or even that you can do without then it is usually best not to get the loan. This is because a loan is not only more expensive than buying something with your own money, but it can be stressful and potentially have a negative impact on your credit record. You may really need the money, perhaps to pay for bills that you must pay or else have services cut off or to cover rent or things that or you may just not be able to wait any longer for it.
How much will it cost?
It is really worth knowing how much the loan will cost you. Think about whether you are prepared to pay this much for the item. For example, if you are using the payday loan to pay for a new fridge, consider how much more it will cost you taking into account the cost of the loan and whether you would still be happy to pay that money for the fridge. You should find that any lender that you look at will be able to tell you how much you will repay in full for the loan, which will enable you to work out whether you think that it is worth it or not.
Is it good value for money?
It is worth thinking about whether you think that the loan will give you good value for money. Consider the cost of the loan and the difference it will make to you. If you are buying something which will only give you short term pleasure will it be worth it compared with something that will give you pleasure for longer. It may be that the loan is to cover bills and if this is the case then it may be necessary to pay them to avoid getting into serious trouble. But do consider whether there will be stress associated with the loan and how it easy it will be to manage the repayment. Also consider how you will manage on less money when you have to make the repayment.
Can you afford the repayments?
With a short term loan you often have to make one large repayment or just a few smaller ones. This means that you will have to manage to pay all of your bills as well as this repayment. This can be tricky if you tend not to have any spare money available each month. It may be that you will be able to cut back somewhere in order to free up some money and it is worth thinking about where that might be. You will need a plan to make sure that you can afford the payment or you may need to consider not having the loan at all as if you have to borrow more money in order to make the repayment then you could end up in all sorts of financial trouble.