Payday loans do vary in price and there are different aspects to them which will determine how much you will pay for them. It is good to find out how much you will pay for one as well as how that compares to other borrowing so that you can decide whether it is the right choice for you. Do think about the value for money as well as the costs though as this can be more important in some ways.
Calculating the cost
You will need to start by calculating how much the payday loan will cost you. This is much easier to do than you might think. This is because payday lenders have calculators on their websites which you can use to work out how much a loan will cost you. They also have representative examples such as the one seen on CobraPaydayLoans.co.uk so you know exactly how much you’ll be paying. You just have to enter the amount that you are intending to borrow and how long you are borrowing it for and it will let you know how much you need to repay in full. This is something which you should be able to do on every lenders website and therefore you will be able to compare the cost between lenders. This will enable you to find the cheapest lender. You will also be able to see how that cost compares to other types of loans so that you can see whether there are other cheaper options.
It is worth remembering that these may not be the only costs that you will pay for the loan. You will need to think about what might happen if you are not able to repay the loan. If this happens then you will be charged extra money. These fees will also vary between lenders and so it is worth finding out how much they will be just in case you end up having to pay them. It may not be so obvious compared with finding the cost of the loan and so you might have to contact customer service sin order to find out for sure. This could be a bit trickier than just using a calculator on the website but it is worth it. If several lenders are similar in cost or if you are not completely confident that you will be able to repay the loan on times, then you need to be aware of the consequences of this and how much you might have to pay out as a result.
Can I afford it?
It is always worth working out whether you can afford the loan before you take it out. You need to consider the amount that you will need to repay and when you will be expected to repay it. Then you will be able to work out if you think that you will have enough funds to cover this cost. Make sure that you do not guess but that you actually check your bank records to make sure that you are completely confident that you will have enough money to repay the loan when you need to. The repayment will be required on the day that you are paid and so you may feel happy that with your salary in the account, there will be enough to repay the loan. However, you will need to make sure that there will also be enough money to cover all of your other expenses that month as well. If you do not check this it could mean that you will end up short at the end of the month and not be able to afford food.
Value for money
As well as looking at the actual cost of the loan, it is worth working out whether you are getting good value for money. People are often prepared to pay a bit more for something if they feel that it is benefitting them in a really positive way. So, you might find, for example, that a payday loan is more expensive than a different similar loan. However, the fact that it can be arranged quickly, it is paid back quickly, you need no credit check and it is simple to apply for may make it worth that extra cost in your opinion. This means that you should not just be concentrating on whether it is cheap or not but whether you feel that you are getting a decent service for what you are paying. As a payday loan is so different to other loans it will be offering you something very different. This means that you need to decide whether each loan will offer you good value for money rather than thinking only about how the costs compare. Obviously you will still need to make sure that you will be able to afford the loan and repay it on time.