Should I use up my Savings or get a Pay Day Loan?

Getting any sort of loan is something that you should think carefully about. A payday loan is often looked upon unfavourably but you need to use the same thought process when you are looking at these and considering taking one out than when you are taking out any sort of loan. You need to consider all sorts of things before you decide. The cost is usually the main factor but there are other things that you should look at as well.

Pros and Cons of using savings

If you have enough savings then you could buy what you need without having to get a loan. This will not only save the hassle of finding and applying or a loan but you will also not have to pay the loan costs. It can be very quick and convenient and you will also not need to worry about the stress of finding enough money to repay a loan.

However, if you are saving up for a specific thing then you may not want to use the money for something else. It might be that you have worked hard to save up or that you really want the thing that you are saving for and so you really want to keep hold of that money. Of course, you could use the money for what you need now, try to save again and get a loan in the future for the thing you are saving for if you do not manage to get enough money. It can be difficult spending savings as we know how hard we have worked to get them and we feel like we want to keep them. However, we need to think about the costs of keeping them and how if we take out a loan it will usually be a lot more expensive than any loss of interest that we will get on those savings.

Pros and cons of using loan

A payday loan is available to most people and companies like payday loans online come highly recommended. You do not have to have a good credit record as no credit check is done and you do not have to wait very long for the money either as the loans can be arranged very quickly. You just have to have an income and a bank account. It is very easy to do and there are a lot of lenders available that will let you have a loan.

A loan will cost you money and a pay day loan can be one of the more expensive ways to borrow. You will normally have to make just one repayment and so you will need to be completely sure that you will have enough money to be able to afford this. Payday loans are also for small amounts of money possibly a few hundred pounds up to a thousand. This means that it may not provide you with enough money, depending on how much you need.

How to pick

It can be quite a tricky decision to make. However, it is important to try to look at things logically. If you calculate the cost of the loan, then this might help you to see that it will be significantly cheaper to use your savings. It can be hard to stop thinking about the hard work that has gone into saving but you also need to take your emotions out of the equation if you can. It could help to discuss it with someone else who might be able to see things from a different perspective than you. They will not be attached to your savings in the same way as you and they may also be able to help you to look through your current spending using your bank statements to see whether you would be able to afford the repayments. They might also be able to help you work out the costs of each option if you are finding this difficult.

It is also wise to make sure that the loan type that you are choosing is the right one for you. There are many borrowing options and so you may find that there are others that might be better for you. It might be that you want a loan that you can repay over a longer term so that each repayment is smaller and more affordable, for example. It may be that you have a cheaper option that you can use.

It is not a decision to be taken lightly. It can cost you a lot of money if you do not do your research properly and if you find the repayments are unaffordable then the cost is even higher. It can be easy to make these decisions quickly because we do not want to spend the time thinking about them or because we need to pay for things quickly. However, it is worth making some time to think things through.

Should I get a Guarantor Loan?

A guarantor loan is a way that some people can improve their chances of being able to borrow. It will allow them to be able to borrow money when perhaps they cannot normally because of having a poor credit record. They nominate a guarantor who does have a good credit record and who will be able to cover the cost of their repayments for them. It can still be quite an expensive way to borrow money but it provides an option for someone who would otherwise not be able to borrow money. It is well worth thinking about whether it is worth getting this sort of loan though.

Should I get a loan

The first question that you should ask yourself is whether you should get a loan at all. Borrowing money is a big decision and we need to be sure that it is the right one for us. Not only is it expensive but it can be restrictive as we have to make loan repayments each month and therefore make sure that we have enough money in order to be able to do this. If you have decided that a loan is the best option for you and you have eliminated other options such as using savings, waiting and saving up, going without the item and things like this, you will be ready to think about which loan will be the best one for you.

Is a guarantor loan right for me

A guarantor loan is designed for those with a poor credit record and so if you do have a good credit record then it might not be the most suitable. You might find that other loan options will be less complicated to organise and cheaper as well. Do make sure you look at all of your options and see which might be available to you.

You will also need to find a guarantor. This is someone that will be willing to make repayments for you if you miss any. You will obviously need to know them pretty well and they will need to be prepared to help you out when needed. They will also need to have a good credit record themselves as this will be checked.

What about the guarantor?

Finding the right person to be your guarantor can be tricky. You may know people that have a good credit record and will help you out but this does not mean that they would be prepared to be a guarantor on a loan. It is important to have a discussion with them about it so that they understand what the role requires.

You will also need to have a think about what might happen if they do have to make a repayment for you. Will they be happy to cover the cost of that or will they expect you to repay them. If they do expect a repayment when will they want it? Will they want it to be after the loan is paid off, as soon as possible or some other time. It is good to make sure that you have a long chat about this. You should even bring up what might happen if you repay none of the loan and they have to pay it all. They also need to be aware that they will not just be paying a repayment for you but also any fees associated with this. Guarantor loans do have fees associated with missed repayments which may have to be paid by the guarantor.

It is also important to think about whether using someone as a guarantor might affect your relationship with them. They might assume that you will be able to pay the loan back and if you do miss a payment and they have to pay it then they might get annoyed with you. It could mean that they cannot afford to buy things that they need. It may also cause jealousy in the family if some members know that you have got this arrangement with the person and they perhaps wish that they had it.


So getting a loan like this can be quite complex. As well as the usual consideration with loans such as the cost and whether you can manage the repayments, you also have to think about the guarantor. Consider who you might ask and whether they will be willing to help you. Think about what they will be able to afford and whether they will be the right person to use. You need to consider what might happen if they do have to make a repayment or more than one and how that might affect your relationship with them and with other people as well. It can be a trickier decision than when taking out a standard loan so you need to be prepared for that.