Few Things That You Need to Consider While Applying for Payday Loan

Published On October 7, 2018 | By James Stokes | Business

Payday loan as a matter of fact is a short-term loan however due to mismanagement of finance, many of us turn it into a long-term debt. Therefore, it is necessary to consider few things before you apply for such kind of loan.  

  • Understand why Payday loan has been designed

Payday loans are not meant for taking loan like any other traditional loans, that you will continue for a long time by paying a regular instalment every month to clear the loan. This type of loan has been designed to provide short-term relief from an urgent or emergency expense. Very high interest is charged for this loan and therefore you must try to clear it as soon as you get your next pay check. If you treat it like any other loan and continue to pay small amount every month then lots of interest may get accumulated and your loan outstanding may rise to very high amount.

  • Who is your lender

There are few reputed lenders like Swift Money and few others who has standard terms and conditions. However, there are many other lenders present in the market, who may not have enough reputation and their terms and condition may not be too liberal. Therefore, before you accept the loan, you must read very carefully all their terms and conditions and you must understand them. If you are not comfortable with any of their terms then you can refuse to take the loan. You will not be charged for not accepting the loan.

  • Consequence of not paying the debt

This loan is almost like credit card payment which must be paid on next due date. If you fail to make payment interest and other charges will be added as per the terms that you have agreed with the lender and you will get revised bill. If you continue to ignore it then legal proceeding will start against you. Therefore, never take such an amount that you cannot afford to pay next month.

  • Your credit score can be affected

If you ever take payday loan then this foot print will come under the notice of the credit agency. In case you end up paying well in time then your credit rating is not damaged. However, if you continue to default for number of months, then it will also reflect in your credit rating. Remember your poor credit rating will make you a high- risk candidate for any type of loan in the future.

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