It can be a worry thinking about repaying any loan. A payday loan can be a bit more worrying as you normally have to repay the loan in one lump sum rather than in instalments. However, there are things that you can do to check whether you will be able to repay the loan and this should help you to decide whether taking one out is a good idea.
Find out how much you will repay and when
To start with it is important to find out how much you will be expected to repay and when. You should be able to calculate how much you will repay on the lender’s website. Think about when you will need to start borrowing and when your payday is, as the difference between them will be the time that you need the loan for. You can then enter the details of how long you need the loan for and how much you want to borrow and you will get the amount that you will need to repay. You will need to repay on the day that you get paid. To compare lenders, you can enter the same information on their websites and you will be able to see which is the most expensive as it will have the highest repayment amount and which is the cheapest as it will be the one with the smallest repayment amount. As well as being able to compare the costs it will also let you know how much you will be expected to repay.
Check your own finances
Once you know how much you will be expected to repay you will be in a situation to work out whether you will be able to afford this. It can be easier to just have a quick think and decide, but it is much better to take a look at your bank statements and think about how much money you normally have available and how much you have to pay out. You will then be able to work out whether you will have enough left to pay for this.
Calculate if you can repay
You need to really be sure as to whether you will have enough. You have looked at previous months and thought about what you normally spend and the money that you normally get in. Now it is important to think about whether you feel that this month and the next month will also be typical. Consider whether there will be any extra expenses that you have accounted for. Perhaps some bills you have come in annually or quarterly and might be due. If you are not sure then look further back in your bank statements and you will be able to check whether any large payments went out.
Cut down spending
If you do not think that you will be able to afford the loan then you will have to think about ways that you can cut down your spending in order to afford it. If you are not prepared to do this then you may just have to forget the idea of having the loan at all. By looking through your bank statement you should be able to identify any areas where you can reduce your spending either by not buying items at all or by buying them from a cheaper retailer.
It can be useful to think about whether there are any ways that you could earn some more money to help out with repaying the loan. It might be that you can do a few odd jobs, some temping work or some online work to earn some extra money that will help you to manage.
Once you have been through this process you should have a clear idea of whether you will be able to afford your payday loan. You might think that it is a rather long process and that all of the effort seems over the top. However, if you cannot afford to repay your payday loan then there will be extra fees and it can mean that your borrowing will be really expensive. It can be worth looking at how much it will actually cost you if you cannot repay as this may help to motivate you to make sure that you do repay or to go without the loan if you cannot afford it. It is important to note that as you will be repaying the loan in one lump sum, that you may find it hard to manage your money for the remainder of the month. You will still need to pay all of your normal bills and so you need to allow for this in your calculations. If you do not, you could end up struggling to make ends meet and perhaps being tempted to take out a further loan.