A payday loan is a short-term loan applied from an online lender to help you deal with an unexpected expense until your next payday, and therefore the duration of these loans just lasts up to 14 days. You can usually borrow money between €50 and €1,000.
Although payday loans are very popular among people, they are subject to high risks. Instant approval is what mainly attracts borrowers to these loans, but you need to carefully decide if they are worth taking out.
These loans are expensive. The interest rate is capped at 0.8% per day, which is the highest compared to other loans. These loans can trap you in an endless circle of debt once you fail to pay back the loan and think of rolling over it. It can damage your credit rating as well lowering the chances of borrowing money at affordable interest rates down the line.
Seeing the impact of payday loans on the pocket, many people prefer alternatives. When you look for alternatives, you often find other small loans like bad credit loans, cash loans, personal loans, etc. They all seem to be more or less the same.
Although personal loans could be used for long-term expenses, other loans have common features. This begs the question of whether bad credit loans in Ireland are the same as payday loans.
Bad credit loans also help tide over during financial emergencies, so you can conclude that these loans are the same as payday loans. But it is not. These loans help tide over during emergencies is just one feature of these loans similar to payday loans in Ireland.
Bad credit loans are, in fact, the same as personal loans. In other words, these are personal loans for bad credit people. Here are some points that highlight the difference between both types of loans:
Personal loans for bad credit are also expensive. Though they do not charge as high-interest rates as payday loans, they are still expensive. You will likely end up paying a lot of money as interest.
If you have a strong income source, you can avail of a better interest rate. This is because it lets up the risk on part of a lender. Another way to mitigate this risk is to borrow less money.
A poor credit rating can call your creditworthiness into question and therefore lenders charge higher interest rates. You are highly likely to commit a default on your loans and this is not a good sign for a lender’s money.
However, good thing is that payday lenders accept payment in a lump sum after 14 days, but you can pay down bad credit loans in fixed instalments. Even if you are borrowing a small amount of money, some lenders would require you to pay down the debt in weekly instalments. This eases the burden on your pocket.
A poor credit loan can be a good alternative to a payday loan but you can seek other alternatives as well. You can find them more affordable than bad credit personal loans.
Having an emergency corpus is a must to meet unforeseen expenses. You should set aside a particular portion of your earnings every month so you keep growing it.
When unforeseen expenses crop up, you can immediately dip into them. This is far more affordable than borrowing money as you do not have to pay interest on top of what you need to cover expenses. If you still need to borrow money, you can easily afford to pay back the debt. Less borrowing amount means a little burden on your pocket.
That turning to your friends or family when you need money is the best. The first approach should be seeking help from them. You may be uncomfortable asking them for help, but they will likely be ready to assist you.
They will not mind helping you especially if you need a small amount of money. They are a way better alternative than payday loans. You can avoid paying interest on the money borrowed.
If you do not have friends or your friends do not seem to give you a helping hand in your hour of need, your family will certainly come forward.
Another way to avoid taking out payday loans is to ask for an advance on your wages. However, make sure you will be able to stretch what you are left with after having settled the debt.
If you are running out of money because of the rising cost of living, you should ask for an increment. Ask your employer if they can raise your pay, but before that, you will have to prove to them you have gone the extra mile to contribute to the business of the company.
A bad credit loan can be an alternative to a payday loan and you can avoid paying too high interest. Further, you do not need to pay off the debt in a lump sum. However, there are still some more affordable alternatives you can seek to these loans.
For instance, you can consider borrowing money from friends or family, talk to your boss for an advance or an increment, and above all create an emergency cushion. Whether you get a hike in pay, you should never underestimate the importance of an emergency corpus.
