What can I use a payday loan for?

There are so many reasons that people experience financial shortfalls. While sometimes it can be a common issue like replacing a flat tyre or getting the washing machine fixed there are also occurrences that might catch you out like your annual MOT, for example. Some people are lucky enough to have a savings pot with enough cash in to cover these unexpected payments that we don’t budget for, but as almost half of the UK adult population has less than £100 in savings, it’s not uncommon to experience a financial shortfall when unexpected expenses arise. While there are several credit products out there to help you manage your cashflow on a monthly or yearly basis, what can you use a payday loan for?

What is a payday loan?

An online payday loan is designed to help you meet your cashflow needs during those times when money is a bit tight. You make an application, and if the application is approved, the funds will be transferred to your bank account, often within minutes – this is just one of the benefits of using an online payday loan. You then repay the loan with the agreed interest on your next payday. You can also apply for an instalment loan online which lets you repay your balance in instalments over a few months, rather than in one lump sum.

Payday loans and instalment loans are flexible so that you can borrow as much as you need and repay it on a date that suits you. This means that whatever the occurrence, you could be able to manage your finances effectively. And, while it’s up to you to decide how you manage your money, there are more responsible reasons to use a payday loan than others.

When should I use a payday loan?

Because you pay interest on a short term loan, it’s not sensible to apply for credit for a purchase that isn’t urgent or necessary. While we all love to treat ourselves from time to time, luxury and leisure payments really should wait until you actually get paid or until you have saved up enough money beforehand to afford them. There’s no sense in spending money you don’t have if you don’t really need to do so.

What about emergency expenses?

However, sometimes payments can’t wait until payday and these emergency expenses are what payday loans can be used for – helping you to bridge the gap to your next payday. Whether it’s a surprise bill that you completely forgot about or an urgent expense that’s just popped up, these one-off and necessary payments are when you might look to borrow money if you can’t foot the bill yourself at that time.

When shouldn’t you use a payday loan?

While you can’t always control what happens, you can manage your financial situation to best suit your current circumstances. If you find that you are regularly relying on credit, it might be time to look at the causes. Maybe you could budget better or maybe you could reduce your normal monthly bills by switching providers – saving a little here and there is always going to be beneficial for tackling future financial difficulty.

Applying for credit should never be your first option when a sudden payment arises, or if your bank balance is a little too low. While it’s possible to get a payday loan within minutes if you apply with a direct lender online, it won’t always be the most financially sensible decision. Think about whether you could adjust your budget for the rest of month or if you even need money to cover the rest of the month – if you’ve only got a few days to go until payday and you know you don’t actually need to make any purchases or pay any bills then there’s no point in applying for a loan if you don’t need one.

Comparing Loans

Despite the fact you might try really hard to manage your finances effectively, sometimes life isn’t always considerate of your circumstances so there may be times when money isn’t as readily available as you need it to be. If you do find that a quick payday loan would help you ease your cashflow until payday, then finding one that suits your circumstances is a good place to start.

Clear and Fair compares loans from different direct lenders so you can find the cheapest loan to meet your needs. We rank lenders from lowest to highest cost so you can rely on the top lender being the cheapest compared to any other lenders in the search results. Payday loans should only really be used for one-off, emergency payments that just can’t wait until payday, and while you might need the cash urgently, taking a few seconds to compare online short term loans might just be the extra help you need.