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Is A Payday Loan Your Best Credit Option

Is A Payday Loan Your Best Credit Option?

Many people overspend from time to time or need a bit of extra cash to cover an unforeseen expense. There are a number of options for covering this type of financial emergency. The one that is right for you will depend on how much you need to borrow and your own financial circumstances. Here are some of the options.

Payday Loans

Payday loans are loans where borrowers get a small amount of money, usually less than Ј1,000. They have to pay this back by the next pay period. The lender charges a fee that equates to a high annual percentage rate. However, this can be a good option for a short term difficulty. Payday loans are quick and easy to obtain, even for people with a bad credit rating.

Secured Loans

Another option for people with a poor credit history is a secured loan. This is where people borrow a sum of money against the equity in their house. This is suitable for homeowners with a poor credit history who need a large amount of money. This might be a good option for someone who suddenly had to fund a wedding, for example. People can borrow up to 125% of the value of the equity in their house and repayment periods can be up to 30 years.

Unsecured Loans

Unsecured loans are normal loans from a bank or loan company. To qualify for these loans, of up to Ј25,000, people usually have to have a good credit rating. Repayment tends to take place over periods of up to 10 years. These loans can be difficult to get.

Credit Card Cheque

Many credit card companies allow customers to use their credit cards to withdraw cash by using special cheques. These can be useful for situations where credit cards are not acceptable. When paying for a new car, for example, using a credit card might increase the payment because of the fee charged by the seller.

People should be aware that some credit card cheques are charged at a higher rate of interest than regular spending on the credit card. If yours is one of these, it may not be the best option for getting short term credit. Remember to read the fine print and check the annual percentage rate.

Authorised Overdraft

This can be a cheap option for overcoming short term financial difficulty. If you are earning regularly and have a good relationship with your bank, you may be able to negotiate an overdraft. This will often be at a reasonable interest rate and will be repaid automatically the minute your salary goes in. Remember to stay within the limit, though, or you could find yourself paying huge bank charges.

Whichever option you decide on, it is essential to make repayments on time and in full. This will help keep your credit history in good shape and will make it easy for you to get more credit if you need it.

Keeping Your Payday Loan Costs Low

Keeping Your Payday Loan Costs Low

A payday loan can help you when you don’t quite have enough money to make it to payday. If you are planning to take out a payday loan, do everything possible to keep your costs low. When you are facing a financial difficulty, the last thing that you need is to accrue large finance fees when you take out a payday loan.

There are certain things you need to be aware of as you research or begin the process of obtaining a payday loan.

Always read the fine print.

So many borrowers are in such a hurry to get their money, that they forget to carefully peruse the contract they are signing and this omission often costs them lots of money. Sometimes the terms of repayment state that unless you specifically inform the company a certain amount of days before your payday, of the amount of payment you want to make, they will automatically float the loan for anther pay period and only deduct a finance fee from your bank account. If this happens, it can end up costing you money you would not have spent had you carefully read the fine print.

Pay the loan back as soon as possible.

When you take out a payday loan, make it a priority to repay that loan as quickly as possible. Every pay period that you float the loan a finance charge is deducted from your account but the loan amount that you must repay doesn’t change. These finance charges can quickly add up to more than the original total that you borrowed. Even if you can’t repay the loan in full, make a payment on the principle each month.

Shop around for the very best interest rates.

Not all payday loan companies are created equally. There are so many payday loan companies that rates are becoming more and more competitive. With the advent of online payday loan companies, it is even easier to compare rates and choose the company that best meets your needs. You can even visit websites that make site comparisons for you. If you take the time to shop around for the best rate, you can save yourself a lot loan fees.