Five things you shouldnâ€™t do when applying for a payday loan
Taking out a cash till payday loan is great short term financial solution and in particular it is quick and easy to apply for and the cash deposit can be in your bank account the same day. However do not let these benefits cloud your judgement as you need to make sure that the loan you are requesting is realistic and that you can afford to repay it in the long term.
You also need to make sure that you are getting the best possible deal available to you and that all the shared information is factual and legal. Therefore we have put together a list of common mistakes payday loan borrowers make so that you can ensure that you avoid them.
Don’t request a loan from a lender that asks for an application fee
There are enough lenders in the payday loan market to be able to source a lender that does not charge an application fee.
Don’t fabricate any information they ask from you
The payday lender will request a certain amount of information from you. By providing inaccurate information such as the amount of money you earn, you risk the legitimacy of the loan. Furthermore, if you exaggerate the amount of money that you earn you run the risk of being unable to afford the loan repayments which could lead to long term debt.
Don’t accept the loan without researching other options first
There are plenty of short term loan options available to you including a plethora of payday loans and also other short term loans. Additional short term sources of finance include a credit card, secured and unsecured overdrafts. If you choose a payday loan make sure that you have researched all the different providers and select the one with the most favourable rates.
Don’t request more money than you actually need
Payday loans are only meant as a short term solution, therefore there is a high APR associated with it. The most favourable rate is 1737% which means you pay £25 for every £100 borrowed for the month. Bare this in mind when you make the decision on how much you want to borrow as the higher the amount, the more it will cost you to repay.
Don’t ask to repay the money over a longer period of time than is necessary
The nature of payday loans means that they are designed to be repaid by your next ‘payday’ i.e. between 14 and 30 days. Therefore if you want to postpone the repayment, you incur a cost which is usually another month’s interest payment i.e. another £25 meaning the total repayment would be £150 instead of £125. It is easy to see how the amount of money owed would rapidly increase, the longer you postpone making the repayment.
We have identified five things that you should not do when applying for a cash till payday loan. As long as you take a sensible approach to the loan and incorporate this advice, you should complete the transaction smoothly and successfully.