When is the Right Time to have a Payday Loan?

A payday loan is a short term loan for a relatively small amount of money. They have to be paid back when you next have a pay day and you usually have to pay them back all in one go. They are expensive compared to other types of lending and many people think that they should be better regulated or banned totally. However, there are many people that use them and some feel that they have been really useful for them. So when should anyone consider having one?

Like all loans it is wise to consider whether you need to borrow any money at all. They all cost money and so you will be better off using savings or saving up for what you want if you can. It is wise to calculate the cost of the loan and think about whether you think that it is worth it. Loans should only be used in an emergency after all and so if you can manage without getting a loan, then it is wise to do so. If you need the money for a bill, for example, you could call the company and ask whether you could delay payment for a while until you next get paid. You may be able to borrow the money from friends and family which could save you the cost of a loan.

If you have decided that you cannot cope without a loan, then it is worth investigating all of your options. You need to think about the cost and whether there are cheaper options available to you as a payday loan can be expensive. If you have a credit card, for example you could use this and if you pay it back quickly enough you will not have to pay any interest on it. You could possibly use an overdraft, although an unauthorised overdraft can be more expensive than a payday loan, so be careful with this option.
The next thing to consider is how you will repay the payday loan. Payday loans are pretty expensive but if you do not pay it back on time, you will find that the costs will increase sharply. This could make it even more difficult to be able to pay back and the charges will keep piling up. Therefore it is really important that you are sure that you will be able to pay it back on time. You may think that setting up a direct debit for the repayment amount will be enough, but you also need to make sure that there will be enough money in the account to cover that repayment. Make sure that there are not too many other payments going out on that day which could drain the account and that there will be the right amount of money available to pay it back.

So it is best to avoid a payday loan if you can. All loans are expensive and these are some of the dearest. Therefore if you do need a loan then see whether there are any other options that you can use. If you do go ahead with the loan then make sure that you are really confident that you will have enough money to be able to pay it off. If you do not then it could end up being really unmanageable and expensive.

It is also worth thinking about whether this financial difficulty is just a temporary blip or whether it is something that is becoming long term. If it is then it is worth looking at your lifestyle and whether you can make some significant changes to improve your situation. It may be that you can cut your spending in some areas or that you can increase your earnings. It is worth looking at every area of spending to see whether you can cut down anywhere. Sometimes you can swap utility providers, brands, insurance companies or things like that and make some significant savings. It may be that you are spending too much on luxury items and need to cut down there. Earning more money can mean that you will not have to go without buying things. If you have a job then you may be able to work more hours or ask for a pay rise. Perhaps it is worth looking for a better paid job or getting a second job.

Is it Sensible to Borrow Money for Home Improvements?

Many home improvements can cost a lot of money and so it can be tempting to borrow money in order to pay for them. Many people do this, however, this may not always be the most sensible approach.

It is worth starting by calculating how much it will cost you to borrow the money. Calculate how much you will have to repay on top of the sum borrowed. Think about the interest and any fees or charges that you might have to pay. This will allow you to make a calculate decision as to whether you still think it is worth doing. Consider whether you would be prepared to pay that much for the work that you are having done.

The type of work that you are considering having done could be a very important factor in your decision. If the home improvements are necessary, perhaps to secure the property, keep it dry or protect the structure then it could be necessary to get the work done as quickly as possible. Delaying it could mean that there will be big problems in the future which could be even more expensive and therefore if you have no other way of paying but a loan, it could be worth it as you will actually save money compared to delaying and having to repair even worse damage in the future.

However, if the home improvements are just decorative then the decision is more difficult. Not doing them, will not cause major problems with the property but will mean that it is not so comfortable to live in. You may like it to look nice for you to enjoy or for guests and family. You may like to keep up with the latest fashions and colours when it comes to decorating colours, furniture etc. This can make your quality of life better, but it is worth considering whether it will be worth having the loan. It can depend on your attitude towards the cost and towards loans. You may have calculated the cost and decided that you think that it is worth the extra costs so that you can get the work done. You may feel that you will not be able to save up for the work and so by borrowing the money and then repaying it, it will be the only way that you will be able to get it done. You may just not want to wait any longer and feel that the extra cost will be worth it if you can just get the work done.

It is worth considering how much you can afford to save up towards the cost of the work and work out how long you will have to save up to be able to afford it without a loan. This can help you to consider whether you think it will be better to wait and save up or whether you want to go ahead with the loan. Think about whether you would be happy to wait a year or a few years in order to save the cost of the loan. It can also be worth seeing whether there is any way that you can make the job cheaper so that you will be able to save up for it sooner or borrow less money.

It could also be worth considering whether you could find a way to spend less and earn more so that you have more money available to you. This could either help you to save up more money or to manage your loan repayments more easily. If you cannot think of a way to do this then this could be an indication that it could be risky of you to take out a loan. As if the interest rates rise and your loan repayments go up, you may have to find a way to spend less and earn more so that you can manage the repayments. You may also find that if prices rise you struggle or if your spending increases and you may also struggle if your salary decreases for some reason. If you have a plan on how you can manage even in this situation then this will not only provide more confidence that you could manage a loan but also could mean that you have the abilities to save up and not get a loan anyway.

Should you use Savings rather than Borrow Money?

There are some people that borrow money despite having savings. There are different reasons for this, perhaps they are saving up for something or they like to have some money to fall back on. However, some people will spend the money that they have rather than borrowing money. Which is the best thing to do?

If you look only at cost, then using savings is the best option. You may receive some interest on your savings but you will find that this will not be very much compared to the cost of a loan. It is easy to compare the two simply by comparing the interest rates. You will then be able to clearly see how much more expensive it will be to borrow money compared with saving it. So therefore, those that are concerned about the cost of a loan will use their savings first so that they can save money.

The reasons for keeping savings and borrowing can vary a lot. Some people feel that they should have some money to fall back on, so that if they need more during the course of a loan they will not need to borrow more. However, if they spend the savings there is a chance that they will not need to borrow anything at all and they will save so much money. If they do need to borrow, they may not need to borrow so much or for so long and it could still work out a lot cheaper. It is always worth doing the maths and working out how much more it will cost you if you keep your savings rather than using them. The peace of mind that comes from having savings is worth something and you will need to weigh that up. However, as soon as you have bought the item you want, you can start building up you savings again. It may take a little while, but if you are careful with your spending and make sure that you allocate some money to your savings account each month, you should be able to soon replace them and you will not have to pay for the costs of a loan.

Some people might be saving up for something specific and so not be prepared to use those savings that they worked so hard to build up. They may feel that it will be a failure of that hard work if they spend that money. However, it is worth considering the cost of doing this, if you calculate the cost of the loan and how much you would save if you used the savings instead then this may help you to change your mind. You will be able to save more money in the long term if you do not have repayments on a loan to make. It is also worth noting that it will be very hard to add to those savings once you are having to make repayments on a loan. However, with no loan you will be able to use the money that you would have spent on repayments , on building your savings back up again.

The reason that you are saving could make a difference to whether you are prepared to spend the money even if you realise that it makes financial sense not to do this. There could be many reasons for this, perhaps if you are saving for someone else or to purchase something for someone else. As long as you are aware of the cost of doing this and you make an informed decision then this would be fine. However, if you are not aware of the costs and do not really have a reason that has been well considered, then you could be making a big mistake and end up losing a lot of money without even realising it.

So if you have savings then it is better to use these to pay for things rather than using a loan. Loans are expensive and you will be able to avoid this cost if you use your savings instead. You will also have the advantage of not having a loan hanging over you and therefore avoid the stress associated with owing money and making sure that you can afford the repayments each month.