We’ve all heard of payday loans and seen them advertised on the television during late-night shows. They are the ones that usually show a really optimistic scene full of actions to try and draw your eye away from the incredibly unattractive – and dangerous – rates of interest attached to them.
But are they as bad as people say they are or are they demonized because they offer you a way out of a tricky situation; a way out that no bank would ever offer you? Or is there, in fact, a way that you can use a payday loan to your advantage? Well, that is exactly the question we are going to answer for you.
However, before we teach you how to pay off your loans, we are going to highlight some definite no-no’s when it comes to borrowing.
Don’t Use Payday loans to:
Pay your rent. It’s too big a risk and too high a figure, so always seek alternative ways instead. This could be borrowing off a friend or negotiating a later date with your landlord.
Buy a car. Anything that costs more than your usual monthly pay cheque should not be considered, especially when there are better finance options available.
Bet on anything. It is an incredibly bad idea to use a payday loan to gamble with and one that is saturated with risks that you could really struggle to recover from.
Investments. Payday loans need to be paid back as soon as possible, and there are very few investments, if any, that will offer you a rate of return to match the growing rates of interest.
So, what are some tips for paying off a payday loan?
The only way to really use a payday loan to your advantage is to have means to pay it off as soon as you can. This is because they come with a huge risk in the form of high-interest rates that you don’t want to accrue. As such, you need to have means to pay any money back fast. This will allow you to have a hassle-free experience and move on without harming your finances or options too much.
And here are some tips on how you can pay back your loan quickly:
You need to plan as much as you can before you take on any loan. This means doing your research and knowing all the info about loan requirements and making sure you know which is the most suitable for you. Shop around as much as possible. Look on valued finance websites that will be able to lay everything out for you, like Moneysupermarket or Which?
You need to make a budget. So go through your monthly pay cheque with a fine tooth comb, and go through all your monthly expenditures. This should include rent, phone bills, tax, grocery shopping etc. Anything you can spare should be put toward paying off your loan.
Whatever you are using the loan for, make sure you borrow the least amount possible. If your fridge has packed-in, then look for a used option instead of the latest model out. The less you borrow the easier it will be to pay off, so make wise choices.