5 Important Things for You to Consider before Taking out a Payday Loan

Jul 22

5 Important Things for You to Consider before Taking out a Payday Loan

Getting into debt is something we are all familiar with. Being short at the end of the month and eating into your overdraft facility is now just a fact of life for some. The times when people most need a bit of spare cash is just after Christmas or immediately following a large purchase such as a holiday or new car. This is when loan enquiries typically peak and statistics are showing that more and more of us are taking out loans, especially payday loans, without really doing our research first.

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Payday loans are becoming more and more popular as borrowers often find it hard to get short term loans from other lenders, however before you take out that payday loan, here are 5 important considerations.

1. Don’t use a Payday Loan to pay off other loans

Payday loans are convenient ways to tide you over until you get paid. Using them to pay off other debts is not recommended as these loans are only meant to be used on a short term basis which is why their APR is much higher than typical loans. If you need to pay off other debts then seek professional advice from a debt counselling service such as the Citizens Advice Bureau.

2. Use Payday sites that comply with the Good Practice Customer Charter

Whilst your rights are protected by law, companies who adopt this charter pledge to follow more stringent guidelines that offer their customers more protection. Companies should at least have the Accredited Business Symbol.

3. Check Privacy Policies

Most lenders are required by law to afford their customers a high level of privacy. With identity fraud on the increase this level of privacy is more important than ever to prevent your details from falling into the wrong hands. Companies should never pass on your details to any third party without your consent. Always make sure therefore that the company you are dealing with have a comprehensive privacy policy that is easily found on their website.

4. What are the Repayment Terms?

Some lenders require the loan paying back in full after a fixed rate whilst others are more flexible about terms. Some will even charge a penalty fee if you pay back the full amount early! Therefore check to see what the repayment terms are and ask what happens in case you are unable to pay the amount back at the agreed date.

5. Compare Payday Loans

Every company is different and some will not be suited to your needs so if you can, use a comparison site where you can by inputting your details, including how much you need to borrow and how long for, and the site compare payday loans will find the best payday loan company for you. Remember that you are not just looking for the lowest interest rates but also the most flexible terms from a reputable company.