There are lots of companies offering payday loans and it can therefore be confiding knowing how to pick the best one. If you are considering a payday loan, like with all borrowing, it is really good to make sure that you are getting good value for money. There are lots of possible things that you should look out for when you are calculating this. Many people may just focus on the price and of course this is an important element, but getting the cheapest loan, will not mean that you necessarily get the best value for money. You need to think about what you need in a loan and make sure that it matches all of your requirements. The sorts of things that you might want to consider are discussed below.
Many borrowers will look at the interest rate when they are looking at loans. This is because it is an easy way to compare them as it is a figure that is often quoted in advertising material and on websites. It is also a figure that comparison websites use so it is no wonder that many of us think that it is the right way to compare loans. However, it can have it problems. Firstly, it is worth noting that interest rates can be calculated in two ways. For example, APR means the Annual Percentage Rate and this is the interest rate. However, some loans have an AER which is the Annual Equivalent Rate. This is the interest plus any other fees that you get charged such as administration fees, so it is a better way to compare. However, if you are comparing different types of interest rate then it does not give you a clear figure.
It is therefore much better to actually calculate the total cost of the loan. This will include the interest and fees that will be charged for the full term of the loan. Then you can compare the different loans and you will know exactly how much you will pay for each and which will be the cheapest. This can give you a much better picture about the loans, but there might be other factors that you want to consider as well.
It is worth finding out about how the loans need to be repaid. Most payday loans require a lump sum repayment on the day that you get paid. This means that you have to repay the full amount that you have borrowed plus all of the costs in one go. However, there are some which let you pay in instalments. These tend to be more expensive because you are borrowing for longer however, it can be much easier to manage the repayments this way, so it is worth considering whether this is a good option for you or not.
There are things that you might want to consider with regards to the lender as well. You might want to read some reviews about them or ask other people about then so that you can find out a bit more. Many payday lenders are not well-known so it is wise to be cautious. You could also have a look at their website to find out more about them as well. Consider what might be important to you in a good lender. For many people it might be that they have good customer service and you can contact their customer service department yourself and you will be able to find out what they are like. Alternatively you might want to find out how long they have been established, which you should be able to do online and what other people think of them, which again, you should be able to find out form reviews online.