How Much will a Payday Loan Cost me?

Payday loans are often talked about as being very expensive compared with other loans. However, it depends on how much you borrow, whether you pay it back on time and the company that you go with. There are some easy ways to work it out though and so you should be completely clear about the costs before you take one out.

Website calculator

On a payday loan website there is usually a calculator that you can use to see exactly how much you will have to repay. You can enter the amount that you wish to borrow and how long for and you will get a figure that will show you how much you will need to repay in total. This can be very useful as if you do it on a selection of sites it will allow you to compare then and find out how much you will need to repay. It is worth remembering though that this is just a minimum amount. Hopefully, this will be all that you need to pay, but it could be the case that you will have to pay extra.

Look at late repayment fees

If you are late in repaying your payday loan then there will be extra fees charged. This is quite normal for any type of loan but often borrowers will not think about this. They will assume that they will be able to repay it and they will therefore ignore the costs of missing a repayment. As most payday loans have to be repaid all at once, this means that finding the money to repay it, could potentially be more difficult.

It is not always easy to find out what their late repayment fees might be. These can vary a lot and will be more likely to be mentioned within their terms and conditions than being anywhere obvious on the website. It might be worth getting in touch with their customer services to ask how much the charges would be.

Even if you are confident that you will be able to repay it in full, it is worth having this information as it could help you to pick between two similar lenders. If they do not differ much in price then you could look at whether their charges are very different and you might want to choose the one that is the lowest. Keep in mind also that some lenders cater for bad credit customers so you may be able to get a better deal if you go down that route.

Consider covering other costs

It is worth remembering that you will still need to cover all of your normal costs as well as repaying the payday loan. As you pay it in one lump sum it could take a significant chunk out of your pay and this may not leave enough to cover all of your other bills. It may be that you will then have to borrow again to be able to afford everything that you need. This borrowing will also have costs. However, if you borrowed money in the first place with a repayment amount that you could manage and you would be able to manage the rest of your bills as well, then this could be better. It might be more expensive to spread the repayments over a longer period of time, but if it means that you will not need to borrow any more money, then it could actually be very useful. Make sure that you calculate how much you would normally have to spend on your essentials and make sure that you will have enough left to cover the payday loan repayment. If you do not, then you will need to borrow less money or find a loan with smaller repayments.

Some people find themselves in a cycle of using a payday loan to pay off a past payday loan and having to borrow more and more. This can end in disaster if the lender stops allowing you to get loans. In fact, in the UK payday lenders are not supposed to allow you to do this because the consequences can be so bad. You might be able to use different payday lenders to borrow from each time but this is still not a good solution as it will be so expensive. It is so much better to make sure that you can repay it in the first place and so ensure you do all of the necessary research and calculation to find out what you will have to pay for during the month and whether you will be able to afford it.

Conclusion
So as well as considering the actual costs of the loan, which can be very easy to find out, you need to consider any additional costs that might come alongside the loan. Make sure that you are aware of how much it will cost you if you do happen to miss a repayment even if you do not think that this will happen. It is always best to be aware and it is something you can use to compare different lenders. You also need to be aware that you will still need to pay for everything else you regularly buy as well as repaying the loan.

Is it Best to Pick the Cheapest Payday Loan?


When we are buying anything, including looking at financial products we tend to want to find the cheapest ones that we can get. It can be good to not overspend but it is not always best to buy the cheapest because you may be forgoing quality. This can apply to loans as well and there also might be hidden costs that you do not notice initially. So, make sure you consider more than the cost.

How good the lender is

Often payday lenders are not that well known and so you may not know anything about them when you start to do your research. This means that you will probably want to find out more about them. You can start doing this by looking at their website as that will give you more information about them and their back story which will allow you to get an impression of them. You will also be able to look at online reviews. Although this can be handy, there is the risk of bias so try to go to a site that you trust. It can also be wise to ask family and friends as to whether they have borrowed money using a payday loan as they will be able to let you know whether they could recommend the lender that they used or maybe let you know that you should avoid them.

It might be tempting to just choose a lender that you have heard of because you feel that they will be a more trusted name to go with. However, if you are not sure why you know the name it may not be a good reason. It could be that you only know them because they advertise, which does not mean that they are good, just that they have the money to pay for an advert. In fact, they might be more expensive because they have to fund those adverts. Also, because people have heard of them, they might be able to get away with charging more and providing a worse service because people will pick them without checking out their reputation as they have heard of them.

Repayment terms

It is really important to make sure that you can afford to repay your loan. This is especially important with a payday loan as you are often expected to repay the loan in one lump sum. Although this repayment goes out on pay day, when you should have the money available to repay it, you will still need to be able to cover all of your other expenses that month. Some payday loans will now allow you to make payments in instalments which means that you spread the cost and are therefore more able to manage. This can be a more expensive way of repaying the loan because you will owe the money for longer but it can be worth it if it means that you will be able to afford the repayments more easily. Whether this is necessary will depend on how much you borrow and how much your other expenses are.

Costs of missing a repayment

There can be quite a difference between how much different payday lenders charge if you miss the repayment or cannot afford to pay it all back when it is due. This will be something that most people will hope to avoid and may even be very confident that they will not need to pay. However, there is a risk for anyone that they may get into the situation where they cannot afford to pay and so it is worth being aware of these costs. It may even be that you are having difficulty choosing between two different lenders and that the charges will be significantly different and this will help you to decide.

Conclusion

So although it is a really good idea to look at the price of a payday loan and compare the prices, you also need to be aware of other factors as well. You will want to go with a lender that you trust to provide you with a good service and their reputation might be important to you as well. You will need to think hard about what you can afford to repay and whether it might be worth paying a bit more in order to make the repayments easier. It is also worth looking at the costs of missing the repayment, making it late or only repaying some of it as this can vary a lot.

It can seem like a lot of extra work to do on top of comparing prices. However, it can be well worth it as it can mean that you get a much better loan that will suit you and your needs better. It does not have to take that long either as you should be able to do all of the research online.