When you get an urgent need, like a car breakdown, sudden illness, or the need to clear some urgent bills, a short-term loan comes in handy. A payday loan is typically a short-term but high-cost loan that is always due on your next payday.
These loans are usually in small amounts, about $1,000, and often structured in a single lump-sum payment. You may consider payday loans because;
- Your credit score doesn’t affect your borrowing power
- The process is convenient
- There is no guarantee required
- Unlimited use of the loan
However, you should be keen when applying for these loans.
Purpose of the Loan
Just because it’s available doesn’t mean you must apply. Payday loans are for anyone, regardless of credit score. However, these loans are for emergency and short needs only. Consequently, you should repay the loan within a short period.
They also attract high interest rates, and if you default, you may pay more than intended. Paying high-interest rates may make you nosedive into debts.
How Much You May Need
In most cases, payday loans have a limit of about $1,000, but it depends on lenders. Since these loans are expensive, it’d be best to figure out how much you need. Any extra borrowing will push the interest up.
Some lenders might also agree to top up your loan, but you need to pay half of the previous loan.
The availability of cash should never make you want more than you need.
Can You Afford To Pay Back?
The best part of payday loans is that you can apply for them even with a bad credit score. However, before you apply, get to know if you’ll afford to pay back and on time.
Calculate the amount to pay back per month to make an informed decision. If you’re lucky, you may ask the lender to increase the repayment period. This allows you to meet your other commitments.
You should also note that an extended repayment period leads to more interest.
Can Payday Loans Affect Your Credit Score?
Any short-term loan you take leaves a footprint. It might be exciting taking many different loans, but it shows the lender you don’t understand the effects of short-term loans on your credit record.
Generally, lenders may feel nervous loaning a borrower with several loan applications. As you may want to build your credit score, lenders see a risk where you may not be able to repay your loans. Lots of different footprints put them off from lending to you.
Ensure You Borrow From a Regulated Lender
Online instant loans are a worry to many. Some lenders offer payday loans at exorbitant interest rates while others have crazy hidden charges. Sometimes, defaulters may face contempt.
The Bottom Line
Ensure you apply for a payday loan only when covering for an emergency. Read terms and conditions to know what you’re getting into beforehand.
B3 Cash Solution is your reliable loan provider. Visit our website for a seamless loan process.
