Four Questions to Ask Yourself when Considering a Payday Loan

There are a number of situations where a payday loan may be able to quickly cure a financial problem. The sudden breakdown of a vehicle, an unexpected medical bill, or an unplanned house repair are all scenarios when a payday loan from Cash in a Flash cash loans in NZ may be able to help. Before starting the application process, however, there are a number of questions which a borrower should ask:

1. How Much Is the Payday Loan Going to Cost Me?

Legitimate payday lenders will lay out all of the fees which you will need to pay in order to obtain the loan. There will typically be an application fee and interest owing on the date which your loan will become due.

If you are unclear about any of the fees you may be charged, ask and make sure that your questions are clearly answered before agreeing to the loan. Failure to understand can result in fees and interest that spiral out of control and end up costing you more than you had planned.

2. How Much Will the Payday Loan Cost Me if I Cannot Pay it off on Time?

Here is where payday loans can start to become expensive. Apart from the fees which you will be charged to take out the loan, the first day you are late with your payment you will begin to accrue mounting interest on the balance owing.

Many payday lenders will also charge a penalty fee if your pre-authorised debit or cheque is returned. These fees can range from being a few dollars to $100 and beyond.

TIP: If you think that your payment may bounce, try to obtain overdraft protection to save yourself any additional fees from your financial institution. You may also be able to use your overdraft protection to pay off any remaining balance on your payday loan.

3. Will I Be Able to Pay it Back on Time?

Before taking out a payday loan, be honest with yourself about whether or not you will be able to pay it back on time. If you do not think that you will be able to pay it back by the due date, discuss this with the lending company and get a full breakdown of the fees and interest you will likely be charged. This will help you financially plan for the loan and stay on top of paying it back on a payment schedule that works for your financial situation.

TIP: Don’t forget to factor in your future bill payments. Paying back the payday loan will mean less money available for the upcoming month for paying your regular living expenses and bills.

4. May I Have A Copy of the Loan Agreement?

A payday loan is an agreement between you and the lender. You are entitled to have a copy of the loan agreement between you and the lender. If the lender refuses to provide you with a copy of the loan agreement, do not sign it and look for a new lender.