A payday loan can be a useful borrowing option for some people. As there is no credit check it can be a loan that is popular with those that have a poor credit rating. They can also be arranged very quickly and this means that they are good for getting money in an emergency. However, there are limits on how much you can borrow and it is worth knowing what these are so that you can decide whether it is the right option for you.
How much can I borrow?
It is important to know that a payday lender will normally only lend up to £1,000 as a maximum. This is because it all has to be repaid within a few weeks in a lump sum, so they need to know that it is an amount that is affordable. They will also not want to take too much risk as they do no credit check so have less confidence that their borrowers will be able to repay the loan on time. There are advantages to only being able to borrow smaller amounts as it will be easier for you to manage the short term loan and you will not be forced to borrow a larger amount than is perhaps necessary for what you want. If you take out a personal loan, for example, they often have a large minimum borrowing amount and you could end up having a lot more money than you need and then taking a long time to repay it. Although this can seem good, as you can treat yourself to some things, it is expensive to repay a loan for longer and you may find that you get a build up of stress as you worry about making sure that you can afford each repayment.
How much will they lend to me?
Although a payday lender can lend up to £1,000 it does not mean that they will allow all borrowers to have that much. If you are a first-time borrower some lenders may only be prepared to lend you a few hundred pounds. They might want to wait until you can prove that you are able to repay that before they lend you more. This means that you may not be able to get as much money as you need. This policy will vary between lenders though and so it is worth checking with different ones to find out how much they will be prepared to lend you. Of course, you might only want a few hundred pounds anyway and so you might be happy with that much.
Shall I have more than one?
You might be tempted to have more than one payday loan so that you will then have the amount of money that you need. Although this could be helpful you need to be very careful. They will both be due to be repaid on the same day and this means that you will need to be really organised to make sure that you have the money available to do this. It works the same as having one, that the money will come out in a lump sum on the day that you are paid. This means that you will need to find the money to repay both of the loans on the same day. It is therefore really important to make sure that you will have enough money. Find out exactly how much you will need to pay back for each one and then look back at your bank statements to see whether you will have enough to repay it. Look back through a few months and make sure that there will be no extra expenses coming out the month that you have to repay the loans. Also consider whether you will have enough money left to cover all of the other things that you will need to pay for that month as well.
So, whether you will be able to borrow enough will very much depend on how much you want to borrow. If you have had a payday loan before then if you return to that lender you might be able to borrow more money with them. It can be worth a try if you need more than you are able to borrow from others. You could consider using more than one payday lender so that you can have two loans added together. This is risky as you may struggle to repay the loans. Make sure that you carefully calculate how much you will need to repay and work out if you can afford this. It can be hard to admit to yourself that you will not be able to afford the loan as you must really want the money in order to be considering one. However, it is so important to think about how you will manage as if you cannot afford it, you could end up in more financial trouble than you are now.