A payday loan is a loan where you can get a few hundred pounds to be paid back within a few weeks. The idea is that you set up a direct debit to pay back what you borrowed plus interest on the day you get paid so that the money is there to cover the repayment required. However, there are still some people that manage to not have enough money to pay and therefore end up paying charges for not making the repayment in time. The charges for late repayments on payday loans are really high. There is the risk that they will start charging at a higher interest rate and charge a fee on top. You need to make sure you are aware of how much this will be before you sign up to one. It is therefore really important to make sure that you will be able to pay it back.
The fact that there is a direct debit set up may make you think that this will mean that you will easily pay it back on time. There will be no need to remember to make the repayment as it will just happen automatically and the money leave your account. However, if there is not enough money left in the account to make the payment, you will not be able to make it. Therefore you need to make sure that you know exactly when the payment will be going out and that you will have enough money in the account on that day in order to cover the payment.
Before you take out the loan it is important to think about whether you will be able to manage the repayment. Consider how much it will be and whether you will have enough money in your bank on the day it goes out to cover it all. If you are not sure whether there will be enough, then it is wise to not take out the loan. You can look at your finances to see though. Take a look at a bank statement and see how much you are paid and what direct debits go out and other expenses on that day. You will then be able to get an idea of whether you would have enough money left to cover the cost of a payday loan. Make sure that you know how much you will have to repay as this will not just be the balance of the loan but there will also be charges as well. Then consider whether there will be enough left in the account to pay it. Probably the biggest reason for there not being enough would be there being an overdraft which gets paid back by the pay packet and therefore leaves not enough for the loan repayment.
It is really important to make sure that you outgoings are not so high that you go overdrawn or that you spend too much so that on the day your payment is due, there is not enough money to pay it. Therefore you should keep your spending down between the time that you borrow the money and the time that you repay it. Try to spend as little as possible to make sure that you give yourself the best chance of repaying the loan. It will only be a few weeks until you have to do this. Use up foods from the back of that food cupboard or freezer or buy cheaper food. Try to avoid all unnecessary spending or delay it. If you have high bills due that you are struggling with, telephone the suppliers and see whether they can reduce your payments for a while. Try to reduce car use so that you do not need to fill up on petrol so frequently and think about every penny that you spend and whether it is necessary or if you can delay paying it until the loan is paid off. You may need to change your spending habits and your shopping habits in order to make sure you have enough money. Think hard about whether you can avoid being tempted to spend money, perhaps by avoiding going past the shops that you normally buy from.
It may seem hard being so careful but it is only a short period of time. Once you have made the repayment you will also be shorter of money than normal due to the fees that you are paying and therefore being careful could be worthwhile for a bit longer. In fact it can be a great habit to get into anyway because it means that you will be able to save up some money. This can be great as it means that if you get an occasion where you need emergency money again, you will not need to have a payday loan as you will have some savings to fall back on.