Finding that there is more month left than money can be extremely stressful, especially when there are still bills to pay and food to buy. You might have run into financial difficulty previously and now find yourself reaching for one of the range of payday loans for people with bad credit. Before you do go down this route, take a little time to read this article first:

Do the maths

Use loan calculators and a budget sheet to work out what you can afford to repay and don’t borrow more than you can spare. Don’t forget to include the interest rate that you will be paying the loan back at. Which brings us to…

Check the interest rate

Do check that you won’t be paying extortionate rates of interest on your payday loan. Lender rates can vary greatly so make sure you spend a little time on your homework before committing yourself.

Look out for additional fees

As well as interest rates, make sure you also read the small print on the costs of any other extra fees and charges that may be made. Late payment fees and default fees can add up considerably.

Don’t borrow more than you need

It might be tempting to borrow a little more than you need ‘just in case’ but this can add momentum to the debt spiral quicker than you first imagine. If you are in a really bad spot with no other option, a payday loan can be a valuable help in the short-term but it’s not a quick ride to a five-minute luxury lifestyle.

Look out for recurring payment agreements

Some payday loan lenders ask you to set up a recurring payment, also referred to as a continuous payment authority. This is when they set up payments owed to them directly from your account on a certain date each month. If this is the case, ensure that the date the payments will leave your account are on a date that suits you, where you know there will be enough cash to cover the deduction. Scheduling the payment to leave your account on the same date that your wages will be going in is the best option. This avoids you getting into trouble with the lender and your bank.

Check their credentials

Is the lender a follower of the Good Practice Customer Charter and FCA rules? Do they offer reasonable options to resolve problems before they escalate? Make sure that the lender you are thinking of dealing with is above board in case any problems arise.

Remember, payday loans are a short-term solution

If you find yourself running into difficulty month after month it is probably time to take a good look at your finances once and for all. Whilst payday loans can be useful as a last resort, if you find yourself turning to them regularly it is likely a sign that your finances are in need of a serious overhaul. Don’t delay taking action if this is the case. Any financial problems can often quite easily be resolved with a plan made early on rather than being allowed to get out of control.

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