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Things you should know before getting a Payday Loan

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A payday loan can be a blessing when you need money quickly. It is a great solution for problems that many people face when they are left short of money in the middle of the month. In simple terms, payday loans can provide to be a lucrative option for money lending.  

As with any other financial instrument, it is important to know certain information to ensure that your loan process goes without hassle. So, we have put together some points that you should know before you apply for a payday loan:

Firstly, do you need one?

A payday loan can be taken out under some conditions. It is important to ask yourself if it is the right kind of financial instrument for you. Some important questions to consider are:

What is it?

A payday loan or a payday advance is when you borrow money against your next payday. This is a small-term financial solution where you need an amount of money to get by until your next pay check comes through.

Are you looking for a way to get a loan for a short period?

Is there a medical illness that needs to be treated?

Is there a holiday that you are planning?

Is there an emergency that you need money for?

How does it work?

This is fairly simple. Here are some basic questions to ask your lenders:

  • What’s the interest rate?
  • Are there any establishment fees and monthly fees?
  • Is there any additional cost of taking the loan?
  • Can I repay early? What happens then?
  • What happens if I cannot pay on time?

Are there any terms or conditions unclear or unexplained to you? If yes, ask your lender before you fill out a form and make a commitment.  

What are the rules to get one?

While it may depend from company to company, there are some basic guidelines that you must meet:

1) You must be a citizen of Australia

2) You must be above the age of 18

3) You must have a specific reason(s) for the loan

4) You should have a stable and consistent income source

Is the company you want to borrow from legitimate?

Make sure that the company you borrow from is legitimate and regulated. This is imperative to ensure that your lending is legal and does not add to your financial woes.  

Ask yourself, can you repay the loan?

The answer to this question stems from how exactly will you spend your next pay check. If there are other expenses you need to make and if you do, what will you be left with. Take out a loan responsibly so that you will be able to pay it back. This will save you and your lender both from any future headaches.  

Can you be rejected during the loan process?

Yes, it is very much possible to be rejected for a payday loan because the lender analyses the probability of getting their money back on time. So, if you have filed for bankruptcy in the past, have a bad credit score or cannot verify your income, you can be rejected for a payday loan.

What should your contingency plan be?

As getting rejected for a payday loan is a possibility, it’s important to consider what you would do if you fail to get a loan. If it is a holiday or an event you needed money for, maybe you can postpone it. If it is an emergency, look at other alternatives that may be available.

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