´╗┐Should I Repay my Payday Loan Early?


Having a payday loan, like any loan, costs money and the longer you have the loan for, the more the interest adds up. This means that the longer you have it; the more expensive it is. Even though the loan might only be due to be repaid in a few weeks, repaying it early could still save money and could be worth it, even if you only make a small saving. You may also want to repay just part of it and that should reduce the interest as well as you will not be being charged interest on such a large amount. Therefore, you might think that repaying it early will mean that you save money but there are some things that you need to be aware of before you do this.

Whether the loan company allows it

It may not be possible to repay the loan early. If it is something that you are hoping to do but you have not yet chosen a loan, then you should check before taking it out. It could be very disappointing if you were assuming that you could repay it early and then you find out that you cannot and you have to pay all of the interest anyway. If this is not clear then the lenders customer service department should be able to clarify it for you.

Early redemption fees

Some loans will have early redemption fees. These will not apply to all loans though and so it will again have to be something that you will need to check. An early redemption fee is a charge that lenders make if they are going to forgo some interest. It might be almost as much as the interest would be anyway but it could be a lot less or there could be no fee at all. Make sure that you are aware of whether there is one and if so; how much it is. It is best to again check this before you take out the loan, if you can as otherwise it might be too late and you may end up being disappointed.

Whether you can afford the rest of your bills

It is great to repay a loan early and be free of the debt and repay less money. However, this can come at a price. You do need to make sure that you have enough money to be able to repay the rest of your bills and cover your monthly expenses. You will be really annoyed if you repay the loan and then need another one because you have not got enough money to manage.

Therefore, you need to do some calculations. Make sure that you get a few previous bank statements and take a look at what bills normally come out. Think about whether you are expecting anything extra to come out before you next get paid as well. Perhaps there are some quarterly or yearly bills to pay or you might need a few new things, have birthdays coming up or things like that. There are lots of things that might need paying for and it is good to be sure that you will have the money that you need available. It should not take too long to work this out and it will be worth it.

Conclusion

Repaying a loan early can be a great thing. You could save money in interest and that will enable you to spend that money on other things. You will also be able to rid yourself of debt earlier than you expected and that could reduce your stress levels. However, there may be a few barriers in your way. It could be that the lender will not allow you to repay early or that they will charge for this. You will need to check this and if you are choosing between loans and hoping to repay early then make sure that you find out if this is a possibility with the lenders you are looking at and whether they will charge you if you do so.

You also need to be extremely careful that you do not spend money on repaying a loan early and then find that you have none left for covering your other costs. If this does happen then you could end up having to borrow again and this could be extremely costly. You could end up paying almost twice as much by having to take out a second loan. Therefore, you need to avoid this if you can. Make sure that you calculate first whether you will have enough money and hopefully this will protect you against this sort of thing happening.

So it is not definite that you will be able to repay your payday loan early and so you will need to check. You also need to be completely sure that this is the right decision for you.

Will I be able to Borrow Enough with a Payday Loan?

Payday loans are now getting more well-known and so people do have less questions about them these days. Most people now know that they are more expensive than conventional borrowing but this is because they will not do a credit check and they can get money to you very quickly. This means they take on more risk and have to work more quickly and therefore charge more for that. However, there are still quite a few questions that people still might have about payday loans and whether they will be able to borrow enough could be one of them.

How much can you borrow using a payday loan

Payday loans do vary and so the amount that you will be able to borrow will also vary. Some lenders will lend up to a thousand pounds but some will not lend that much out. The lenders may also decide how much they lend based on whether you have borrowed before. For example, they may only lend you a few hundred pounds the first time you borrow with them but if you pay that back when required then you will have built up some trust with them and they may allow you to borrow more when you approach them again. This means that if you are a first-time borrower you are likely to be at a disadvantage. The amount that you can borrow may also be determined by your income as if you have more money available to repay then you may be able to borrow more.

If you approach different payday loan companies then you may find that they will be prepared to lend you different amounts. This means that if you need an amount that some companies will not allow you to borrow then you should be able to find a company that will. It may take a bit of searching but will be worth it if you can find the right company to help you.

Some people might take out several payday loans at once in order to make sure that they have enough money. This is unwise and should not even be allowed as payday enders do have restrictions on them. They are not supposed to allow a person to have more than one payday loan but it is possible if you go to multiple companies and this can be risky for the borrower. Obviously the more that is borrowed, the more that needs to be repaid. If all loans need to be repaid on the same day then you could find it impossible to have enough money to pay them all or to have enough money left after you have paid them to manage all your bills.

How much should you borrow with a payday loan

It is important when you are borrowing money to focus more on how much you should borrow rather than how much you can borrow. It is really wise to borrow the smallest amount possible. This is because you need to think about the cost of the borrowing and how easy it will be to repay. The less you borrow the cheaper it will be and the easier it will be to repay.

Therefore, you need to think about what you want the money for and therefore how much you need. You should make sure that you need to borrow it all and that you cannot get some from other sources, perhaps form your savings, by selling things or something like that. Then you can borrow the very minimum amount. It can often be tempting to borrow a bit more than you need so that you can treat yourself to something. However, this is expensive and having a larger loan will increase the risk that you will not be able to afford the repayments.

Some people would even argue that the purpose of the money was important when deciding whether to borrow any money using a payday loan. That if the money was being used to buy luxury items then it is not worth the cost of a loan and that the person should wait to buy the item or not buy it at all. Some say loans are for emergencies only. This is obviously a very personal viewpoint but it is worth remembering that because you have to pay for loans you do need to be really sure that they are the right thing for you.

It is also important to make sure that the amount that you borrow will be small enough for you to be able to afford to repay it. Calculate how much you can afford to repay and then look at how much you normally have left at the end of each month after paying your bills. You should be able to see this by looking at your bank statements. By doing this you will be able to see whether the repayment will be manageable for you or not.