The decision to take out a payday loan must be well thought out by us, because it is often a commitment that we will pay back over the next few years. However, when we are sure that we want to take this step, it remains to find the best offer that will be beneficial. What should we pay attention to in order to choose the right offer?
How to choose a payday loan ideally suited to our needs? It doesn’t have to be difficult, just stick to a few proven actions.
Analyze your financial possibilities
A payday loan is a very serious commitment, so when we decide to take it, we should carefully examine our budget. Our regular revenues as well as monthly expenses should be taken into consideration. This will help us determine how high installments we can afford to still have the funds we need every day. Sometimes it turns out that a better solution is to extend the loan, while reducing its installment. It is true that the final cost of such a loan will be slightly higher, but it will not overburden our home budget too much.
Before we go to the selected financial institution, it is also worth analyzing our creditworthiness. It is on this basis that the bank will decide whether it should grant us a loan. In this case, of course, the amount of income is taken into account, as well as its source, but the most important factor turns out to be our history of previous loans. If we pay earlier obligations on time, we become automatically much more credible as a borrower for the bank.
Compare offers of several banks
Often our attention is immediately caught by the offer of a specific bank, for example the one in which we currently have an account. It seems attractive to us, so on impulse we want to take out a loan. Especially since in some cases when relatively small amounts are involved, formalities are kept to a minimum. Let’s not get carried away! The decision on the loan should be preceded by a thorough familiarization with the terms offered by the bank and comparing them with other offers.
When we see in black and white information about several different offers, it will be easier for us to see which ones are better and which are worse. It may often seem to us that a loan is even tailored to our needs, but when we become familiar with the competition’s offer, it may turn out that the conditions proposed to us are not so favorable. It is worth comparing as many offers as possible, the more so because it is really easy nowadays. All you have to do is use the internet and credit comparison to find out in a few moments which banks should get our attention.
See all the costs associated with the loan
Very often, in their extensive promotional campaigns, banks are tempted by the vision of extremely low interest rates. Undoubtedly, such slogans attract the attention of potential borrowers. However, before we blindly believe in advertising slogans, we must understand that the costs we incur in connection with the loan, are not limited to the amount of interest. Therefore, before we decide on a specific payday loan, we should count how much it will actually cost us.
For some time, every bank has been required to provide its clients with a special, unified information form. This is a very important document that we should remember, because it contains full information about what exactly we have to pay in connection with the loan taken out in a given bank. Such a form is given to each borrower before signing the contract with the selected financial institution.
Although the information contained in such a form is extremely important, it is worth remembering that banks often use some tricks to lower the APRC and the total cost of credit. This can be done, for example, by omitting additional fees, which may include, for example, costs associated with maintaining an account set up in a given bank, or using an ATM card. For this reason, it is worth making all the calculations on your own to be aware of how much money we will eventually have to give back to the bank. It is worth paying attention to whether we need payday loan insurance. Usually, with a small amount of cash credit, this insurance will not be necessary.
A loan tailored to your needs
When choosing a payday loan offer, we should also take into account our own needs and expectations related to such a commitment.
A good example are loan offers for a purpose specified by the bank. There are financial products that assume the use of the money obtained for the holidays, a new car or renovation of the apartment. It is worth looking at such offers up close, because they can be really profitable for us.
When planning to use a payday loan, we should also think about how we would like to pay it back. We can choose repayment in equal and decreasing installments. The first option is to pay the fixed amount each month. These types of installments include debt and interest. With the fact that we initially pay back more interest than capital, then the proportions are reversed. In the case of decreasing installments, their amount gets lower with time. They consist of the amount of debt repaid and interest, which is calculated on the amount of the outstanding debt. The capital is repaid faster and the sum of interest is lower.