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Things to Consider Before Applying for Short Term Finance

There are some things that you should seriously consider before getting a payday loan. The first is to question whether you really need the money enough to pay the interest charges. The average interest rate is 1737% APR. In real terms this equates to around £25 per every £100 borrowed on average. If you are borrowing money for a non-urgent reason it could be worth skipping the loan on this occasion. If you stop for even 1 month, you could do what you were planning to the month after without needing to borrow the money to do so, without paying the fees to do so.

If you need to borrow the money to cover a financial emergency, which is what the main use for short term loans is. Consider whether this is a one off. If this is a one off emergency and you can afford to pay the interest a short term loan could really help you out. The benefits of an instant loan is that there is no waiting to make appointments to apply and this can be a huge factor on people’s decision to apply.

If the need to use a payday loan is a regular one or you are consistently short of money before you get paid it is well worth seeking independent financial advice. This is available for free some several organisations within the UK. You may think that these people can’t help you but they can often give sound advice on how to solve your financial worries long term, not just to push them off past each payday.

Here are some places where you can get free independent debt advice.

  • Advice guide
  • Civil Legal Advice (CLA)
  • Consumer Credit Counselling Service (CCCS)
  • National Debtline
  • Payplan

Can you borrow the money from somewhere else? Sometimes, despite the hit on your pride it can be much better if you can borrow the money from family or friends. This is because no interest or extra charges will be incurred which will give you a better chance of coping until the next payday after you repay the loan.

The final question is do you understand the interest charges and the implications of not paying? It is extremely important that you make sure that you understand the cost involved and the ability to repay it back on time is there.

If you do not pay a payday loan back just like other types of loan, you can incur late fees and charges. Many lenders offer the ability to extend the repayment term if you need to.

It is important to select a website to apply on that has a consumer credit licence. A site that is licenced by the OFT is much more likely to be on the level as there is a recourse if it is not. If it doesn’t follow the rules it could even lose the licence and have to cease trading. Unlicensed websites could be much less secure and are not bound to obey the rules.

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