The pressure and stress of a financial shortfall can lead to impulsive decisions. You see a way out, and you rush to it without considering your options. We’ve all been there, in some way or another.
A short-term loan offers a fast and convenient way to bridge the gap. When used responsibly, they can alleviate your financial stress, but there are things to think about first.
Take a step back for a second. Breathe. Read on.
Are You Eligible for a Payday Loan?
Make sure you fit the criteria first. Most short-term direct lenders are lenient in terms of eligibility, but there are specific things they look for.
You need to be over-18 and live in the UK. You need to provide ID, passport or driving license, as well as proof of address. This could be a bank statement, utility bill or tax form.
You need to be employed in most cases. Some lenders offer loans to people claiming benefits, but many ask for payslips or proof of payment. You may need to show your earnings over the last 6 months.
Your expenses are key too. Give a holistic overview of these and be open. Credit checks are a minor factor, most lenders overlook poor credit, but your ability to pay back is vital.
Explore Your Other Financial Options
No-one likes to ask parents for money as an adult. To bridge a pay shortfall though, family could be an option, and most would never charge you interest!
Your friends could help too, depending on their circumstances and your comfort level. Even if you borrow from friends or family, treat it as a real loan with real payment dates.
Selling items online can earn you cash. Never part with sentimental items, but used furniture and electronics sell well online. It will take time though – auction sites can take a week or more, and you must consider returns and other headaches.
Can You Afford Your Repayments?
When you’re desperate for extra cash, it can be tempting to overlook things. Scrutinize your expenses for the next 6 months and be honest with yourself. Job security is a factor too.
Factor in added fees for potential late payments. Hey, things happen, and you need to ensure you pay everything back. Ask your lender for a detailed explanation of their late payment protocols.
Think About the Potential Risks
The high APR rates for short-term loans are much higher than most credit. Rates over 1,000% are common, but this is worked out over a full year. When you pay back your over a few months, your interest rate will be manageable.
If you fail to pay back your loan, you could see yourself stuck with huge amounts of debt. Direct lenders should give you sufficient warning when you apply. Missed repayments will sink your credit rating, making it harder for you to get other forms of credit in the future.
Pay your loan back on time, and you will have no issues. Use the right direct lender, make sure they will protect your data, and form a repayment plan.
Are You Still Ready to Go Ahead?
FCA-authorized payday loans will help you tie things over. Consider all the above beforehand, but when you’re ready, choose a direct lender with a solid reputation.