At Christmas time we encounter lots of extra costs. Not only is there the cost of presents we also buy and post cards, buy decorations, extra food, travel more and often buy new clothing as well. We may have parties to pay for and work Christmas meals as well. These can really add up and it can mean that many people find it very difficult to manage their money and look to borrow money in order to help them. Although borrowing can be a solution it is not always a wise one and so it is best to think hard about it first.
– Is it necessary? – with all borrowing it is always good to ask yourself whether you really need the money. If you are borrowing to pay for decorations, clothing, extra food, gifts and other Christmas luxuries then it is less likely that it is really necessary for you to spend the money. Obviously we are all different in what we consider to be necessary and so it will be a very personal answer. Try hard to think about whether you can cut down, earn some extra money or spend less elsewhere so that you can keep your borrowing to a minimum.
– Can you afford to repay it?- you will usually have to repay a payday loan in one lump sum. This is usually set up by direct debit to go out on the day that you are paid so that you have the funds available to repay it. It is worth thinking about how you will manage once that lump sum has gone though. Consider whether you will then be able to stretch the remaining money until you are next paid. This will depend on how much you have to repay and whether you are expecting any large expenses the following month.
– Is it worth the cost? – it is always worth calculating the cost of a loan. This will allow you to see whether you feel that it is worth it. Imagine that the items you are buying with the borrowed money are that much when you buy them and whether you would be prepared to pay that much money for them. You might be completely happy with doing this, but you may not. Only once you have worked it out can you make a decision as to whether you feel it is worth paying the extra.
– What are the risks?- there are risks with all loans. You may struggle to repay it and find that you get charged for late or no repayment and the costs rise and what you owe grows. You may then find that tis will impact your credit record meaning that it will be harder for you to borrow in the future. There is also a risk that you nay not be able to manage your money well once you have repaid the loan and that you need to have another one in order to manage and this could potentially happen for many months, costing a lot of money and causing a lot of stress.
It is always worth thinking hard before taking a loan. After deciding whether you really need to borrow the money you need to decide whether this is the best loan option for you. A payday loan does no credit check so is really aimed at those that do not have a good credit record and so have no other borrowing options. However do not assume that a payday loan will always be the dearer option. Make sure that you do compare prices as you could find that there are more expensive options out there as well as potentially cheaper ones. By comparing loan types and then payday loan providers you should be able to get a good deal.
So if you have alternative borrowing options to a payday loan then compare the prices so that you can work out whether a payday loan will be cheaper or not. You may find that it is not that dear as you will not be borrowing the money for that long compared to some other forms of borrowing which are more long term. However, think about whether a short term loan will suit you as you will have to repay it very quickly and so you will not have much time to find the money and it will be a big chunk all at once. If you are using it for Christmas it will be January when you have to pay it. This can be tricky as often people get paid early in December and so the wait for the January pay check can seem never ending and then if you have a loan to repay as well it may just not go as far as you had hoped and you could struggle again.