Category: General

Having an overdraft can be a convenient thing to help you if you need a bit of extra money. You will be able to write checks and draw money at the ATM even though you do not have any in your account. However, it does have drawbacks as it can be a very expensive way to borrow money. This means that if you are overdrawn, you should take steps as soon as possible to repay what you owe.

Look at other borrowing options
It is wise to take a look at what other borrowing options are available to you. You might find that you have the opportunity to take out a cheaper loan that you can use to pay off the overdraft. This can save you money but you do need to be very careful. You need to start by making sure that you will be able to afford the repayments on the loan. Look into how much they will be and make sure that you will have enough money each month to cover those payments. Look back at bank statements and not what sources of income you have and what you spend your money on and you should be able to work this out.

Borrowing money does have additional risks though. You need to think carefully about whether you will be tempted to use your overdraft while you are repaying the additional loan that you have taken out. This could lead to you having two forms of debt and you will end up paying out more money and struggling financially even more. You know whether this is a big or small risk for you. Consider how you view your overdraft. If you feel it is something which never be touched apart form in an emergency you are probably safer in getting the loan compared with someone who feels that it is extra money that they can spend and have fun with.

Find extra income sources
Whether you decide to get a loan to repay the overdraft or you want to repay the overdraft without a loan, it is still wise to think about how you might be able to increase your earnings. If you can do this it will mean that you will be able to be more easily able to pay off your debts. There are lots of ways that you could try.

To get a lump sum of money then you could consider selling any things that you have that you no longer need or want. You might be able to social media, classified ads, auction websites or even have a garage sale in order to raise some money. Although this will not bring you in a regular income; it will help you to get a chunk of money that you could put towards paying back what you have borrowed.

Having a more regular income is a better way to finance the loan and there are many options for this. If you already have a job then you could try for a pay rise or promotion or see if there are more hours of work available that you can do. If you do not have this option then it might be possible for you to take on a second job so that you can get extra income this way.

Some people are not able to work or cannot work outside of the home due to a disability or family commitments. It is still possible to earn though by doing a work form home job. These come in many different forms and you could consider freelancing, starting a business or taking on small tasks. There are many online jobs that you can pick up as well. It is important to be careful though as it is easy to be conned by work form home companies. Never send them any money and make sure that you read the reviews first to ensure that you trust them.

Spend less elsewhere
It is also wise to make sure that you cut down your spending. You want to keep as much money as you can for repaying your debt and therefore you need to try as hard as you can to only spend the minimum amount. This means that you will need to compare prices when you buy things and make sure that you get the best value for money and only buy what is completely necessary. This can be difficult but it is worth reminding yourself that it will only be until the debt is repaid and then you will be able to afford a few more things. Getting into the habit of not spending too much is a good idea as it will hopefully get into good habits that will prevent you from spending too much and going overdrawn in the future.

There are many payday lenders and choosing which one is the best can be difficult. It is even tricky to sometimes decide which factors are important when you are picking between them. Some of these factors are discussed below in order to help you.

Cost
It can be wise to find out exactly how much the loan will cost you. You should be able to calculate this or ask the lender how much they are charging. There can be some big differences between lenders and you could save a significant amount of money if you use one of the cheaper companies. You do need to be careful though as some may have a low interest rate but high fees or vice versa. Therefore, make sure that you are looking at the whole cost and not just one or the other. If you are unsure then contact the lender to ask. You will also be wise to make sure that you ask about how much they charge if you are late to repay. These costs can be significant and even if you are confident that you will be easily able to repay in full, you should keep these costs in mind. Hopefully they will motivate you to ensure that you do repay in full but also they will give you something else to compare when you are deciding which lender to use.

Repayments
It is really important to make sure that you will be able to afford to repay the loan. Usually with a payday loan there will be one repayment which will be due to be repaid on the day that your receive your pay check. This should mean that you will have the money available to pay it but you will need to make sure that the payment comes out after the time of the day that you are paid. It may be wise to even set it for the day after if there is a risk that you will be paid late in the day. A direct debit will be set up to cover the payment so that you do not have to remember. You may find that there are some payday lenders that will allow you to repay in instalments. This could be more attractive as it will mean that you can spread the cost and make it more affordable. They will charge more for this though as you will be borrowing the money for longer. It could be worth it if it means that you can cover the cost of the repayments and manage your money more easily afterwards. As the money normally goes out in a lump sum then some people can struggle to afford everything else they need to buy that month. This can sometimes end up in them having to get another payday loan to manage.

Customer Service
You may feel that it is important to be able to communicate effectively with the lender. You may wish to be able to speak to them and discuss any queries or problems you might have and get some good answers. Some lenders are better with this than others and so if you have a short list you may like to contact each of them to see which impresses you the most with their response. It is best to contact them using the method that you would expect to use to contact them once you have the loan. You may have to wait a while for a response but if you think that you will normally be in a hurry for an answer and they do not respond quickly then this would be a reason for rejecting them. However, if you contact them by email then it will take longer to get a response than if you call them up.

Reputation
It can be worth finding out a bit about the lender so that you have an idea of what their reputation is like. It can be good to see if you can find any reviews or comments, perhaps on personal finance websites or message boards so that you can see what others think of them. Do be careful with this though as you are unlikely to find very much in praise of these companies as people are far more likely to feel string enough to leave a comment if they have had a bad experience compared with a good one. Asking family and friends could also be a neat idea as they have no reason to be biased and they will want to help you.

It may take some time to gather together all of this information and it may be that you need the money really quickly. It is worth it though as you could save a significant amount of money and have a much better experience if you pick the right lender. It is therefore best not to panic and make a snap decision but take some time to do the necessary research first.