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.
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.
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.