Should I use Payday Loans to buy Gifts?
There are many questions that we might have about payday loans. This is because many of us may not have used them before. They are not like traditional loans, which more of us will have used and therefore it is well worth thinking hard about them and learning more about them before using them. Find out how they work, who they are for and what they are for and this will help you to be able to decide whether they are the right type of loan for you to use. You will need to think about way that the loan works and what you want to buy and then decide this. For example, if you want to buy gifts, will they work?
How much can you borrow?
It is a good idea to start by thinking about how much money you need for the gifts that you are buying. There are lots of different possibilities here. It may depend, firstly, on how many gifts you need to buy. If it is just for one birthday, then you will not need as much as if it was for Christmas, for example. So, think about this and then you will know whether you will be able to borrow enough.
The amount that you can borrow may depend on a few factors. For example, different payday lenders will lend different amounts. On average they will tend to lend between £100 and £1000 but this will vary depending on the lender. You may only want a small amount anyway but if you do want a larger amount then you may need to check that the lenders will give you that amount before you consider using them.
You may also find that lenders will not lend you large amounts of money right away. This is because a payday lender will not do a proper credit check or need collateral to lend you money. They will therefore need to find another way to build up trust with borrowers. This means that many of them might only lend smaller amounts of money to first time borrowers to see whether they will repay them. If the loan is repaid in full, then the lender will be more willing to then lend a larger amount of money next time. This means that if you do need a larger amount you may not be able to get what you need. However, if you compare different lenders, then you will find that this will be different for different lenders and so you will be compare them and decide which you think might be the best for you.
Can you repay it?
It is also really important to ask yourself whether you will be able to repay the loan. You need to find out how much you will need to repay and when and this will enable you to work this out. To do this you need to start by either using a calculator on the lenders website or asking the lender how much you will need to repay. This will be the amount that you borrowed plus the interest and any fees. With a payday loan you will need to repay this in one lump sum on the day that you are paid.
You may then think that this will mean that you will have plenty of money available to repay it. However, you need to be really careful and do some calculations. You need to think about how much you have to pay out on other things as well. This is where it is really important to actually take a look at how much you pay out for things that you need. Then look at how much money you get in and work out whether you will still have enough money left to cover the loan repayment.
It is important to make sure that you think about whether you have any extra expenses that specific month or whether your salary might be lower. This could be due it being a short month if you get paid per day, perhaps annual expenses such as insurance, car MOT or things like that occurring as well. Look back to the bank statement form the previous year to check these things out.
It might seem like a lot of hassle to do all of this but it is worth it. It will help you to be able to find the lender which will give you a loan for the amount of money that you need and that you know that you will be able to repay it. Then you will be able to take the loan out with confidence and know that you will be able to repay it and cover all of your other essentials as well. So, you can use the loan to pay for gifts as long as you are happy that you will be able to repay it.