Payday loans are set up differently to many other types of loans and it is important to understand how they work and think about whether you will be able to repay it easily. This is a personal thing and something that someone should calculate before they take out any type of loan.
How is a payday loan repaid?
Payday loans tend to be repaid in one lump sum. This is different to other loans where you are often expected to repay in instalments over a number of months or years. There are some payday loans which offer the option of repaying in instalments, but most of them will just expect a lump sum repayment.
The loan is repaid on the payday that comes after the day you take out the loan. This means that you could hold the loan for anything from a few days to a few weeks. There are advantages in this because it means that the loan is not hanging around for too long. The lender will set up a direct debit to go out of your account on the day that you are paid, which means that it is easy for you to repay. You will not have to remember and sent the money, it will just go automatically.
Can I manage to do it?
The fact that the loan is repaid on your payday means that there is a big chance that you will have enough money to repay it. This is why it is set up like this. However, there may still be a chance that you will not have the money available and therefore you need to think hard about whether it is the right loan for you. Firstly, you need to make sure that you will be guaranteed to have your pay arrive on the day that the money goes out. Some companies will not always pay on time and sometimes the day you get paid varies depending on how many days there are in the month. Make sure that you set it up so that you will definitely have been paid when the direct debit goes out.
Also, you need to be aware of what other money is coming out of your account. You need to think about whether there will be other direct debits coming out to start with. You also need to note whether you are likely to have an overdraft as well. An overdraft will be automatically repaid when you have money arrive in your account. This means that if you have an overdraft when you get paid, it will be paid off and you might find that you will not have enough money left to repay the loan. This means that you will need to be careful and budget so that you do not get into this situation.
You also need to be aware of the other payments that you need to make during the following month. Normally you would have your salary to make these payments but if you are repaying a large lump sum of money, you will not have so much money available to you. You will need to budget carefully and perhaps spend less on a lot of things. You may even need to earn more money so that you can afford everything that you need. It is wise to do some calculations to work out how much you will need and have a plan as to what you need to do so that you are well prepared.
Is it easy to repay?
Whether it is easy to repay will depend on your own personal situation. It will depend on what other expenses you have, how much you are paid and how much you borrow. It is worth making sure that you work through the information and look at your expenses and things like that so you know whether it is the right loan for you. For some people it will be easy to repay and for others it will not be. You will need to take a look and find out for yourself. Obviously, the more you borrow, the harder it will be to repay and so make sure that you only borrow the minimum amount that you need. If you are careful and borrow the amount that you can afford, do careful calculations and budget well then it could be easy to repay. However, you never know what might happen and whether there will be things that could make it more difficult. It is up to you to make sure that you are in control of the situation and that you only borrow money that you are confident that you will be able to afford to repay. Therefore, it should be easy to repay as long as you are well in control.