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.