The benefits of small payday loans

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Taking a tiny loan over a month may make sense

It seems likely that at some point or another every consumer will find themselves in a position where a little extra cash is needed. Unfortunately in life there will always be unexpected expenses or bills which occur, which simply could not have been planned for in advance. Take for example an unexpected vet bill, an injury to a pet can be a costly occurrence and one which through any another of effort often simply cannot be avoided. With such an example the requirement to obtain funds can be immediate to avoid further issues. The same can be said for a broken down car, there aren’t many vehicle owners who can get through the entire existence of a cars life without something breaking and going wrong. When such expenses occur many consumers can find the situation stressful, not only because of the even itself and the implications but also the requirement to obtain money quickly. Although many consumers are able to successfully pay their bills month in and month out and still have a little spare to do the things they enjoy and make purchases as they wish, the requirement to suddenly pay £500.00 may be too much to ask of many average consumers budgets. In the modern economy consumers are used to managing credit like never before. Many have their cars or sofas paid for in this manner and therefore are able to demonstrate an ability to manage credit effectively. As a result of this it is little wonder that small payday loans have become so popular over the years. Nowadays consumers are using these loans as a way of supporting their monthly income, should they need to do so from time to time. The key with small payday loans is borrowing sensibly and responsibly. Providing this is the case there is every possibility such a loan is able to support expenditure, rather than increase it.

Small payday loans are loans which are typically applied for online, making them discreet and easy to access. The product offered by lenders has changed over the years and the modern day product is far more flexible than the offerings of years gone by. In the past small payday loans meant a consumer could borrow until their next pay day as the name suggests. On the agreed date the loan and any interest charged was payable as a lump sum. Nowadays the product being offered by lenders is more flexible and offers a range of repayment terms. Many of the products now offered in fact are based on instalments. As has always been the case the application process for modern small payday loans is online based, meaning consumers can apply at any point in the day which suits them. The introduction of smart mobile phones means that this is possible in any location too. The loans typically considered remained small in size and usually range from £100.00 to £500.00 in the case of the majority of lenders. If approved the customer can realistically expect to receive the funds into their account the same day. The product now being offered as mentioned is based on instalments, which means the repayments can be tailored to fit in with existing monthly bills. Many lenders offer customers the possibility to repay the loan over either 3 months, 6 months, 9 months or even 12 which means there is a real feeling of choice.

The fact with this type of borrowing for any consumer is based on the fact the loan must be affordable. This means ensuring a realistic monthly repayment is selected at the point of borrowing and also means ensuring over-borrowing does not take place. The easier way to ensure this is the case is by comparing the proposed monthly instalment offered by the small payday loans provider and comparing the commitment to existing costs and bills. For example a customer who needs £300.00 for a new washing machine, whose monthly income is £1400.00 and has outgoings of £1250.00. In this example the customer is aware they normally have £250.00 spare and as a result can afford an instalment which sits within this amount. If this customer was to commit to a one-off old fashioned loan, they may face a repayment in the region of £372.00 for borrowing the required £300.00 for 30 days. Straight away it is obvious the customer does not have means to repay the proposed loan. Instead a customer in this position should consider repaying the balance over a number of months which will allow the monthly instalment to be greatly reduced and therefore affordable.

 

By Kieran Moulden