If you are looking for a payday loan, then you may be rather unsure about how to choose between them. There is quite a lot of choice and so you will need to think about how you decide which of the different loans will be the best for you.
When looking for loans, many people will just look at the interest rate. It is a figure that is easy to compare as you can normally see it quite clearly. However, some people do not really know what that rate actually means; just that it should be as low as possible. They may also not realise that it is not always the only cost and the only consideration when looking for a loan. It is worth thinking about everything that the loan has to offer you and then considering which one will be the best. Some ideas on what sorts of things could be worth considering are below.
The cost is the most important thing to most borrowers and it is understandable why this is the case. However, it is worth understanding that with many loans, including many payday loans, the cost is calculated in several ways. There will be a standard fee for the loan as well as an interest rate. This means that it can be trickier to calculate how much you will have to repay. This is why payday lenders have a calculator on their website for you. All you need to do is to enter how much you wish to borrow and it will let you know what the total repayment will be. This will include repaying the money borrowed plus the interest plus any other charges. You then know exactly what you have to pay in monetary terms. This makes it easier to compare with other loans as you can just compare this single figure.
Obviously the cost of the loan determines how much you have to pay for it and for most people is something which is the most important factor for them. If you do not have that much money, which most people borrowing with a payday loan will not have, then even a few pounds difference in cost can be a big deal. However, there are other things that you should also consider when you are choosing between the different loans.
Repayment terms refer to how often you make repayments and how many you make. With many payday loans you make the repayment in full when you next get paid. This means that you have to repay everything you borrowed plus the fees and interest in one payment. This means that the loan is paid off relatively quickly and that can mean that the burden of debt is gone. However, repaying over a longer term, so splitting repayments up, can be easier for many people to manage. Having a smaller amount to repay over a series of months can be therefore be better and some payday loan companies now offer this option. It is worth thinking about whether it might be easier to repay over several months rather than just have to repay everything in one lot.
Think about how you will manage for the rest of the month if you have to make a large repayment on a loan all in one go. It may mean that you spend most of your money then and have little left for other bills or to manage to buy everything that you need for the rest of the month. It could be a lot easier if you have several smaller payments and then you will spread the cost and not find it so difficult to manage. It may also make the difference between whether you are able to manage the loan repayments or not. If you cannot afford to repay it when it is due, then you will have to pay a late repayment charge.
Late repayment charges
These charges differ between lenders and so it can be useful to compare them. Even if you think that you will not have to pay this and you are confident you will get the loan paid off, it is wise just to be aware of what the cost could be. This is because if you are comparing two lenders that look very similar, this could be a difference that will allow you to choose which is the best. You also need to be prepared, just in case you do find that you cannot pay for some reason and you get charged. It is also wise to prepare for the worst just in case, but do everything you can to avoid getting into the situation.
It is really important to choose a lender which has good customer service. If you have any sort of problem or questions for the lender, then you will want to know that they will be prepared to help you. Most lenders will have a customer service department available to contact by telephone or online and so it is worth contacting them before you take out the loan so that you can judge what they are like. Ask them a few questions and see how good they are at answering them so that you can see if you think that they are helpful and polite enough.
It is worth seeing what other people think of the lender as well. Although you may not share their opinion, it is good to just get an idea of what they are like if you have not used them before. You should be able to find some information about them on financial forums and places like that which will help you to decide. It can also be worth speaking to friends and family that have used payday loans to find out which lenders they used and what they thought of them. Remember to look at different lenders and compare them as some comments may put you off a particular lender but you could find that another one has even worse ones.