If you are already in a cycle of payday loans you will know that they are an expensive way to borrow. If you are uncertain that you can pay it back on time and in full, then consider other options because things soon spiral out of control as we have seen regularly with people contacting us at PCCU.
You have to hand it to the Payday loan industry that they are very good at advertising. But who wouldn’t be with the advertising budget they throw at it! They like to suggest people take their loans for a variety of reasons; however research has shown a high percentage take out loans for re-occurring expenses like bills and rent. If you have taken out a loan for these circumstances then it is worth sitting down and creating a budget of your incoming and outgoing finances. This way you will be able to see if you can afford to pay back the loan and identify areas where you need to make changes to budget better.
It’s worth thinking that if you are considering a payday loan it’s likely that you’re living beyond your means or are in debt already, a payday loan with a high interest rate will be even more damaging to your financial health.
If you are thinking of rolling over a current payday loan, reconsider because it only creates a larger debt trap.
So here are a few things to consider when weighing up whether to use or roll over a payday loan
- Is the reason that you are thinking about a high interest payday loan really worth getting into this cycle for?
- If it is for a bill that will keep re-occurring like petrol, rent, food shopping or a utility bill- then look at your finances to see why you cannot cover these
- How much are you actually paying for the loan, and what are the cost if you are late paying
- Sit down and write a budget. Track your regular income, and then your regular outgoings/bills. If there is not enough to cover your essentials and leave at least a slight surplus then a payday loan is not for you. You need to reassess your priorities
- Speak to the providers of your bills and see if they can help by delaying payment, or accepting part payment. It’s not great but a lot better than the alternative
- It is NOT wise to use a payday loan to pay another payday loan
- If you are unsure whether you can pay back in the timescale, do not enter into the agreement- it will lead increased charges and make the situation worse
- Consider organisations such as citizen advice bureau who may be able to offer guidance and options on debt
- Speak to friends or family. It might seem like a big deal to ask them, but it is better than letting things spiral and in most cases they will understand and could help
- Some employers offer wage advances, it is not a loan and you will not be charged interest
- When you do have any surplus money, start saving to create something to fall back on. Even small amounts build up and could provide cover
Click here to speak to your local Credit Union to see if we at PCCU can offer a more affordable model of borrowing, we are free to speak to, very approachable and friendly. If we cannot offer you a loan we will always try to inform you why.