How to Ensure you can Repay your Payday Loan

Taking out any sort of a loan is a risk as you will need to make sure that you are able to repay it. With payday loans online this can be more difficult because you often have to repay everything you borrowed and the interest all in one go. You also have to repay it within a few weeks of taking out the loan which means that you need to find the money quickly. There are some things that you can do which will allow you to be more likely to be able to repay the loan.

Set up the direct debit on the right day

It is really important that you set up the direct debit that pays off the loan on the right day. You need to set one up and it will be suggested that you do this on the day that you are paid. However, if you are paid late in the day, then the direct debit may come out before your pay arrives in your bank account. This can be a big problem as you could end up not having the money available to pay the bill. You will then face extra charges. It might therefore be wise to set it up the day after you are paid. Then though, you will need to be sure that there are not so many other direct debits going out that there is not enough money to repay the loan. Getting the timing right for this is therefore crucial or else you might face extra fees.

Do not borrow too much

It is really important to make sure that you do not borrow too much money. You need to make sure that you will be able to repay it and so if you borrow too much then you will have a higher risk of not being able to repay. Obviously, you will be borrowing for a purpose, but you need to make sure that you are not tempted to borrow more money than you need. It is easy to think that if you get a little more then you can treat yourself to something, but you need to be aware that you will have to repay this and it could be difficult. If you have any spare money then you can use this to repay the loan rather than borrowing it and this will be cheaper for you as you will not have to pay interest on this bit.

Spend carefully

It is important to make sure that you are really careful with how much you are spending once you have taken out the loan. You will need to manage your money really carefully both before and after you repay your loan. This is because you will still have to find the money to buy all of your essentials as well as repay the loan. It is therefore wise to not buy any luxury items and spend as little as possible on those things that you do have to buy so that you will be able to manage. There are people that find that once they repay their loan, they cannot manage for the following month and so have to get another one. This is something that you want to avoid if you can and if you minimise your spending this will certainly help.

Check other direct debits

It is wise to check what other payments you have coming out of your checking account and when. This will enable to ensure that you have enough money to pay them as well as the loan. Adjust your budget so that you are able to afford everything that you need to.

Earn Extra

It may be that you find that even if you really reduce your spending you will still not have enough money to repay the loan. If this is the case then you need to find a way to earn some extra money. This may sound really difficult but there might be some ways that you could earn some quick cash. Firstly, think about whether you have leant any money to friends and family that you might be able to get back. Consider whether you have anything that you might be able to sell and that could raise some money that you could put towards repaying the loan. You may also be able to do a bit of freelance or temp work to bring in some extra money. There are also ways that you may be able to earn online, although you need to be wary of scams. You may be able to work some extra hours in your current job or ask for an advance on your salary to help you to manage. Even a few extra dollars could make a difference with repaying the loan, so it is worth taking a look to see what opportunities there are available to you.

Should I Apply for a Larger Overdraft?

If you have an overdraft on your checking account you may sometimes feel that it is not large enough. It could be that you would borrow more money if you could or that you are borrowing more than you have been given and this means that you get charged more money for using an unauthorised overdraft. You may feel that a solution to this problem would be to get a larger overdraft. There are advantages to doing this but there are also disadvantages. It is therefore worth considering these as well as any possible alternative solutions.

Advantages of getting a larger overdraft
The larger overdraft will allow you to borrow more money. This could help you out of a tight spot and will be cheaper than relying on an unauthorised overdraft. These can be considerably more expensive. It could therefore be a way of saving you money if you normally go beyond your agreed overdraft limit. It can also allow you to have more money to cover the things that you need to buy.

Having more money available can give us a feeling of freedom and take away the sense of worry that we might have associated with the fact that we did not have enough money available to us.

Disadvantages of getting a larger overdraft
The problem with having a larger overdraft is that you may be more likely to use it because you know that it is there. Normally you may be put off spending too much because you know that you are limited on how much you can borrow. Therefore, you may budget more, cut back and generally try not to overspend. With extra money available you may become tempted to spend more than you really can afford.

It can be easy to forget that an overdraft has its costs. It usually has interest and a fixed cost which means that you pay twice for it. The longer you are overdrawn; the dearer it will be as well. Although an unauthorised overdraft is dearer, it is worth remembering than an overdraft is still an expensive way to borrow money.

Getting into the habit of using your overdraft all of the time is not good either. It will mean that you will almost always owe money and this will not only be expensive but it will mean that eventually you will be in a situation where you need more money and you will not have any overdraft left to spend. Even an unauthorised overdraft is not limitless as you bank will eventually put a hold on your checking account and not allow you to withdraw money or write checks.

The best solution is to start budgeting well, living within your means and no longer going overdrawn. Obviously, this is not as simple as it sounds, but if you start making changes to your spending habits and try to find ways to earn more money, then you will be able to find ways that will enable you to spend less money.

It may be that you need a solution in the meantime. While you are working on how you can spend less and earn more you may need to find a cheaper way to borrow money. There are many loans that are cheaper than an overdraft and so you may be able to get out one of those and then you will be able to repay the expensive overdraft. Of course, you will then have to make sure that you have enough money to keep up with the repayments on that loan. Before you take it out find out how much the repayments will cost and then work out carefully how you will be able to afford them. If you normally go overdrawn then this indicates that you have trouble making ends meet. Therefore, you will need to find a way to make sure that you can afford all of your essentials and the loan repayment. Come up with a strategy, a back up plan and the determination to be able to keep going with it until the loan is repaid. You also need to be aware of the fact that if the interest rate on the loan increases (perhaps if it is a variable loan and the prime rate goes up) then you will need to find more money in order to cover the repayments.

It is a big decision and it is important to make sure that you think through what will work best for you. Borrowing month to month is not something that can be sustained indefinitely as you will eventually run out of money to borrow. This means that you need to find a way to manage the money that you have. This might mean that you need to borrow more money in the short term but you will need to find a way in the long term of being able to repay it all.