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. 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.