When we are looking for a loan, we may wonder whether we are allowed to use it for certain purposes. This is not surprising as there are some loans which are designed to have certain uses. For example, a mortgage is designed for buying a home and you would not use it for anything else. However, there are a lot of loans which do not have specific purposes and therefore you can use them for anything you wish A no credit check payday loan falls into this category. However, it may still not be the right loan to pay rent. It is worth thinking about whether it will work for you.
Can I borrow enough?
It is important to start by checking whether you can borrow enough money to cover the cost of your rent. Payday lenders will tend to lend up to £1,000 and this might be enough to cover many rents. Obviously, this will very much depend on where you live and how big your house is. It is also worth knowing that some lenders will not always lend larger amounts to borrowers that have not borrowed with them before. This is because they will want to build up some trust first. As they do not look at a borrower’s credit score, then they will need to build up trust in a different way. This mean that they will ask a borrower to just borrow and small amount and then when they have repaid it on time, they will feel that they can trust them more and that will enable them to feel happier to lend them more money. Some lenders will only lend a few hundred pounds initially and this could mean that it will not be enough to cover rent. However, lenders will vary in this and so it may be a case of comparing them until you find one that will offer the amount of money that you need.
Can I repay it?
It is also extremely sensible to make sure that you can repay the loan. A payday loan has to be repaid in full, with the interest and fees on your next payday. This means that you will have to find the money that you need to repay it very quickly. Of course, as the repayment falls on your payday, this means that you should have enough money available to repay. However, you may have to make sure that you have enough to pay anything else that has to be paid on that day only as well as at other times. You may have to pay another instalment of rent, for example and therefore need enough money left for that. It can therefore be sensible to make sure that you have enough money, by looking at you last few bank statements and working out what payments you will have to make and whether you will have enough money after repaying the loan. If you feel that you will not, then you will need think of some ideas. You may have to not get the loan at all or you might be able to think of some ways that you can earn more money or spend less so that you will be able to afford it. It is worth coming up with some realistic plans so that you can ensure you will be guaranteed to be able to afford everything you need to pay for.
Am I happy with the cost?
Lastly, you should think about whether you are happy with the cost of the loan. You should be able to work out the cost quite easily. Often a lender will have a calculator on their website where you will be able to out in the details of how much you need to borrow and how long for and it will let you know the amount you will need to repay. If you take away the amount that you borrowed, then you will be able to work out the cost. You then need to consider whether it is worth paying that much more. Of course, if you miss the rent payment there will be consequences. It can be well worth finding out what those consequences will be. Talk to your landlord or letting agency and explain that you are struggling and what will happen and they will let you know. Otherwise it will be in your rental agreement if you have that handy. It might be that you will need to pay extra interest or some fees or charges and if this is the case you will need to compare this to the cost of the loan and work out which will be cheaper. You might be evicted, if this is the case then it is very likely that you will think the costs are worth it!
If you decided that a no credit cheque payday loan is the right choice for you, then you are part of the way to finding a loan. You now will have to compare the different lenders that are offering this type of loan, to see which one will be the best. This can be quite a challenge. This is because you may not know what to compare or you may not know how they will differ. There are quite a few ways they may differ and as each borrower has different needs, it means that you will find that there are different lenders that are suitable for different people. In a way this can be frustrating because there is no way to decide which of the lenders will be best for everyone. If there was an obvious answer then there would only be one lender that everyone would use. However, everyone has individual needs and therefore that means that you will need to think about which one will suit you the best.
Identify your needs
It is important to start by thinking about what you need from a loan or lender. There may be obvious things that you can think of but you may wonder whether there are other things that you should be thinking about that you may have forgotten. This is why there is a list below of perhaps some of the more important things that you should perhaps be considering when you are identifying which lender could be the best one for you.
- Interest rate – many people will start by comparing the interest rates. It seems quite easy to look at the different rates offered by different lenders and then pick the one that is the lowest. There are two reasons though, that this might be a problem. The first is that you need to look for value for money and the cheapest may not be the best. Value for money is discussed more later. The second is that you may find that the interest rates are not comparable. This is because some lenders will use their APR (Annual Percentage Rate) and the others might use AER (Annual Equivalent Rate). The Annual Percentage Rate is the interest rate that will be charged for a loan if you keep it for a year. If you compare annual percentage rates across different loans, you will be able to compare how much interest you will pay. However, some will give an Annual Equivalent rate because they also include any fixed fees that will also be charged. These are better to compare because they include everything that you will be charged and so you will comparing the full cost of the loan.
- Fees – Loans will have two types of fees, these will be fees that everyone has to pay and fees that are charges if you do something wrong. For example, it is possible that all borrowers will need to pay administration fees. If you are late for a repayment, then you will be charged a fee. This sort of fee will only be charged to certain people; only if you do not stick with the terms of the loan, will you pay this extra. It is worth knowing about all fees though and comparing them. You may think that you will not get any charges as you are sure to repay the loan on time. However, there may be two lenders that are very similar apart from how much they charge for a late repayment and therefore it might be good to know this information as it could help you to choose between them.
- Repayment amount – the repayment amount will be the amount you have to pay back in full which includes the amount that you borrow plus the interest and fees. If you can find out exactly how much this will be, then you will be able to compare different loans to easily see which will be the cheapest. It is actually quite easy to find out this figure as well. Most lenders will have a calculator on their website and you ca just enter the amount that you want to borrow and how long for and they will tell you how much you will need to repay in total. This information is much easier than comparing interest rates as you can see exactly how much more or less you will be paying and the difference between a few pounds and tens of pounds is significant but the difference between a few percent is hard to imagine so you will not know what the difference in monetary terms will be.
- Features of lender – some people will also want to see what the lender will be like. They might want a lender with a good reputation, that has good reviews that is well established or that they have heard of. There are all sorts of possibilities. It is a good idea to think about what you might want form a lender, perhaps one of these things or something else, so that you can find one that will suit you.
- Value for money – lastly you will need to fit this all together and find the lender that is most suited to your needs at the best price. This could mean you will end up paying a bit more money, but this could be worth it if it means that you will have a lender that gives you a better service.