Small Payday Loans

Explaining affordability for small payday loans

Warning: Late repayment can cause you serious money problems

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Representative Example: Representative 1286.98% APR on a loan of £300.00 with 5 monthly repayments of £101.03 Total amount repayable £505.13 Annual interest rate (fixed) 290%

This article contains information about products/services offered by us as well as those that we do not offer.

Author: Internal Marketing Department

 

Before any kind of loan is ever taken out a customer must be aware whether they do or do not have the required funds to make the repayments required on the product and thereby of course the loan is affordable. Missing repayments is always something people would like to avoid for a variety of different reasons. Missing loan repayments can nearly always result in severe negative consequences for that person involved.

To help people review the affordability and suitability factors on small payday loans or other types of finance the potential customer should ask themselves whether they definitely need the loan in the first place and if so then how much do they need to borrow.

They also need to know what type of loan is required for example is it a short term loan or a possible instalment over a possible longer payment term. Car finance and credit cards and other lines of credit are other common loans in the market place which people regularly take out.

Choosing the lender to apply for a financial product through is always another question that has to be thought about. There are so many different lenders out there and they can each offer different things to the borrower. Each loan type, and lender also has their own benefits and negative factors.

In this article I am going to explain how people can access their own affordability to know whether financial products can be comfortably repaid back to the lender and as agreed. People can use this information below if they are looking at taking out small payday loans and other short terms loans as well.

A good way to know whether a loan is affordable would be for someone to work out what their disposable income is each month after all their financial commitments are met. This can change from month to month but it still gives people a good indication on whether a loan is realistic for people to take out and then afford the repayments due on that product.

A good way to gain this information would be for someone for the month ahead to write down all their income expected including wages, any possible benefit payments expected. After that is done from the overall total figure then deduct all the monthly outgoing expenditure for the same time frame and this includes rent/mortgage repayments, other living expenses and any other debt repayments that have to be made. The amount left over after this calculation is known as the disposable and also called the spare monthly income. That amount is basically just the amount of money a person has left to themselves for the month after all their bills are paid.

People can use that amount to see whether a loan is affordable for them to manage during the entire duration until it is fully repaid. If someone for example has a high disposable income every month they know that the loan is affordable for them to manage and repay successfully but on the other hand if the amount is frequently low or simply does not cover any instalments due then the loan should not be applied for. Again missing loan repayments can nearly always result in negative consequences for anyone involved.

People can soon start to realise that small single payment payday loans can be even harder to budget for and therefore can be tough to afford at times. When a payday loan is taken out the customer should know that the loan is due for full repayment normally within a single monthly period and on their next payday. The interest charged on the product is high so repaying the capital borrowed as well as the interest charged in a single transaction can be hard to manage and repayment can be missed as a result.

The interest can vary on the lender chosen but it is normally up to £24.00 charged per £100.00 borrowed by the customer per 30 days. Repaying any loan whether it be a payday loan or alternative option will be tough when paying back the full balance in one go. People may benefit from an instalment loan here as once those loans are obtained a customer can repay over a term that they choose until the balance is repaid. They this way can split their monthly costs over a payment amount that suits them and more important is affordable for them to make and then maintain.