If you are thinking of taking out a payday loan you may be concerned about how easy it will be to repay them. This is something that should be a concern to every borrower as we need to be sure that we will not be charged extra because we are unable to repay the loan. There are things that you can do though which will make loans easier to repay. It is a good idea to think about these and to make sure that you are confident that you can repay a loan before you take one on.
How payday loans repayments work
Payday loans, especially those for bad credit are quite different to many other types of loans in the way that they are repaid. Most loans are repaid in instalments but a payday loan is repaid in one lump sum. This means that all of the money borrowed plus the interest and charges are all repaid in one go. This can be a great thing as it means that the loan is repaid really quickly and for some people, this can be a great relief as they do not like being in debt. The loan is also repaid on the day that you are paid which means that there is a greater chance that you will have the money available to repay it.
The loans are set up so that you will repay them in full on your next payday. This is done by a direct debit so that there is no chance that you will forget to repay. This means that you will not need to worry about this, but you will need to make sure that you have enough money available in your account to pay it. Even though you have just been paid, there may not be enough.
How to ensure you can repay
It is important to check all your finances to ensure that the payment can be made. Firstly, you need to be completely sure that your pay will get in that day. Some people get paid on a certain date, others the last Friday in the month or things like this. Make sure that you are completely sure when yours is due. Also find out what time of the day you are paid as you need to make sure that they pay is in the account before the repayment goes out. If you have any doubt then it could be best to set the direct debit to have the payment to go out the day after you are paid.
You will also need to find out what other payments automatically go out of your account around that time. You might have utilities, contracts, loan repayments, rent or other direct debits or standing orders all going out around that time of the month. This means that you need to find out how much they all add up to so that you can be sure that there will still be enough money coming out to pay for the loan. You will also need to think about whether, once the loan is paid, you will have enough money left to pay for everything else you need to buy before you next get paid.
If you are concerned or find that you will definitely struggle then you still have a few options. Firstly, see whether there is a cheaper loan that you could take out. Also see whether you can find ways that will make repaying easier. You could perhaps see whether you can cut down your spending in other areas. You could also see whether you will be able to earn more money too. These might seem difficult but there could be things you could try. Things like comparing prices on everything you buy and asking yourself if all purchases are necessary, for example. Then you could consider whether you can earn a bit more, even getting a little form doing online work or a bit of overtime could make a difference.
Having a backup plan
It can also be really wise to have a backup plan. Hopefully you will only take out a loan if you are completely convinced that you will be able to repay it. However, you might also be wise to have a think about what might happen if an unexpected bill comes in and it stops you either being able to repay the loan or being able to manage to pay for everything else you need. This means that you should have a plan as to what you will do if this happens to you.
It is worth thinking of what you might eb able to do to help. You may have things you can sell; you might be able to do some freelance work or extra online jobs. You might be able to cut back spending even more. There could be all sorts of things you might be able to do. It is wise to come up with a very specific plan so that you can be confident that you will be able to use it should you need to.