There are many different reasons why you may need a short term loan. You may, for instance, need a little extra cash near the end of the month because:
- There was a medical emergency
- You are facing a huge repair bill for your car
- A household appliance suddenly need replacing
- You need to travel somewhere unexpectedly
In essence, short term loans can help you out of unexpected short term financial difficulties. Before taking out a payday loan, you should, however, make sure that this really is the right solution to your problem.
Questions to ask yourself before taking out a loan
In order to determine whether a payday loan is a viable solution to your unexpected short term financial difficulties,you should ask yourself the following questions:
- Do I really need a loan, or could I overcome this issue by revising my budget (see our post on ‘How to Budget Effectively’)?
- Will I be able to repay the loan in time?
- Will repaying the loan in time still allow me to pay my regular bills (rent/ mortgage, utilities, other expenses, food, etc.) without having to take out another one at the end of the following month?
Unless you can answer all of these questions with a resounding ‘yes’, a payday loan may not be the right solution for you. Here is why.
Why a loan may not be the right Solution
If your monthly expenses already exceeds your income, you may not be able to repay your loan in time. As a result, your loan account will accrue default interest and late payment charges, making it increasingly difficult to keep up with payments. Even if you take what money you do have available to repay the loan promptly, it may leave you in a situation where you have to take out another loan to cover your regular expenses again at the end of the month. Before long, you are heading into a downward spiral of continually having to take out extra loans, effectively leaving you permanently in debt.
The budget planner on the Uncle Buck Website can help you work out whether a short term loan could help you without causing you any financial difficulties. When you apply for a loan, we will make the necessary checks to ensure it is possible for you to make the repayment by the required date and, if so, we will provide you with a provisional agreement showing you exactly how much you will have to repay; what charges you will incur for late payments, and so on (you can also see detailed information on these charges on our Website).
Our advisors can help you to make the right decision for your circumstances. Give them a call on Tel.: 01959 543 400 for helpful advice and answers to all your payday loan related questions.