Category: Payday Loans

Payday Loans

Is a Payday Loan the Best Way to Pay for a Car Repair?

If you need an urgent car repair, then you may need to borrow the money to be able to get it fixed. It could be that you feel a pay day loan will be your only option. Although this could be the right option for you, it is worth looking at all of the other options first so that you can be sure that you are making the right decision.

Savings

If you have any money saved up, then it is best to use this rather than borrowing. This is because you will end up paying far less for the repair. If you borrow money to pay for something then you will usually have to pay interest and possibly fees as well, in order to cover the costs of the loan. It can be hard using savings, particularly if you are saving up for a specific thing or like to know that you have some money for emergencies. However, this is the sort of emergency that you should be using savings for. The cost of a loan can be very high, much more than any lost interest on savings. If you are saving up for something, then you will be able to save up for it again once you have paid for the car repair and you will be much better off financially this way.

Overdraft

An overdraft can be a convenient way to borrow money. Most of us will have access to one with our current account and therefore if we withdraw cash or pay on a debit card and use more money than is in the account we will use it. Although convenient, an overdraft can be very expensive. You will start being charged immediately and if you go beyond your arranged overdraft limit, you can actually end up paying more in charges and interest than on any other type of loan. This does depending on your banks charges of course, but it is still likely that there will be cheaper options available.

Credit card

The great thing about a credit card is that you do not have to repay what you owe immediately. This means that you can use it to make a purchase and then wait a good few weeks before the bill comes in and you have to pay. You can even organise for the bills to be paid just after you are paid so that you know that you will have the money available to pay it. The pitfall of a credit card is if you only repay the minimum each month. This will usually be just enough to cover the interest and a little more. If you continue to spend on the card and only repay the minimum you could end up paying a large amount of fees for it. It is much better to repay the full balance or as much as you can each month so that the debt does not build up and you will not have to pay so much in interest charges. Be sure to repay the minimum too or else you will end up having even higher charges to pay.

Payday Loan

A payday loan is an option often used by those with a poor credit record that do not have access to overdrafts or credit cards or that have already used up their available credit on those. It is a quick way to get money but it can be expensive and risky so you do need to be careful. As with all loans it is really important to make sure that you can afford to repay it. A payday loan often has to be repaid in one lump sum, but a direct debit is set up just after you are paid so that there will be enough money available to do this and no chance of you forgetting to do it. These loans can be expensive though and if you do not make the repayment then there will be extra fees, as they would with any loan. These can add up quite quickly with this sort of loan.

So whether a payday loan is right for you will depend on what other types of credit you have available to you. It is important to make sure that you calculate the costs of the different types of loans as well as the risks and see which you think will be the cheapest for you. Then you need to compare the different lenders to see which has the cheapest option for you. This will be quite a bit of work but it will be worth it when you get the best deal. You could save a significant amount of money by choosing the right way to pay for your car repair and making sure that you repay it on time.