A guide to payday loan companies

Some times, your pay just does not reach far enough. No matter how much you try, you can't look into the future and will have no idea about any emergencies that are just around the corner. It can mean that you need cash now rather than waiting for your next payday. There are now companies that offer payday loans but there are three points that you should consider.

They are only for short term lending

The problem with these online payday loans is that they are only for the short term. You will need to pay the money back by your next payday or you will suffer from high interest rates and risk damaging your credit rating. Great for emergencies These cash advances are a great option when you are struggling with an emergency, such as a broken boiler or your cash has broken down. However, if you are struggling with debt and want to consolidate credit cards, then you should look at other options. Opting for short term loans will mean more interest and more money to pay back.

Check out the fees

Before you opt for a payday loan, you should look at all of the online lenders and compare their fees. Don't consider the APR at first because this will not give a true indication of what you will pay back in the first 31 days. You will need to look at the fees for each month and also look into whether companies offer a daily rate rather than just a flat monthly rate, especially if you are only a few days away from payday. Rewarding borrowers Most loan companies will arrange a settlement if you want to pay off a loan earlier than you originally agreed to. The payday loans companies won't ask you to do this and will actually cut down the amount of interest that you will pay for borrowing for a shorter time.

Help your credit rating

Something that many people don't realise is that a payday loan company won't look into your credit history. They are more bothered about your current financial situation. If you've been bankrupt in the recent past or have CCJs, you will still get the loan and they can help your credit rating. You will be able to show that you can borrow money and pay it back.

Don't borrow money for the sake of it However, that doesn't mean that you should just borrow money to help improve your credit rating. If you do fail to pay it back, you'll make your credit rating suffer even more. If you can, look at arranging an overdraft or negotiating with the companies that you owe the money to so that you can pay when you are paid.