When you take out any loan, you will be charged for every day that you have that loan until it is repaid in full. This means that the less time that you have the loan for, the cheaper it is and therefore it is best to repay it as soon as you can. Sometimes there are early repayment fees though and these can make it more expensive to repay the loan, but these tend not to be applied to payday loans, so you can usually repay them early with no fee and therefore save money. It is always worth checking though, whenever you plan on repaying a loan early, to make sure that there is no fee to do so. Choosing when you take out the loan can also help to keep it cheaper and having a shorter repayment loan can also be cheaper but can have risks.
Choosing When to Apply
With a payday loan, you will usually borrow the money until you next get paid. As interest tends to be calculated daily; the closer you are to your pay day; the cheaper the loan will be as you will be borrowing money for less days. This means that if you delay getting the loan as long as possible, then it will be cheaper as you will have the loan for less time. As the loans are quick to arrange, you can leave applying for one until you just cannot manage without the money anymore and this should allow you to only keep it for the shortest possible time and therefore pay the minimum amount of interest on it. Do find out how long the payday loans take to arrange though, most only take a few hours but some could be longer, so it is best to be sure. So if you are considering a payday loan, do some research and pick the one that you want, but do not apply until you are absolutely sure that you are ready for the loan and then you might be able to save a significant chunk of money. Even delaying for a few days could save you quite a bit and will make it easier to repay.
If you can possibly repay early then you will be reducing the length of the loan and therefore the cost of it. However, you do need to check with the lender in case there is a charge for this. Many loans do have an early repayment fee and it can be really high. They put these in to make it harder for you to switch lenders and they are common on large loans like mortgages. However, they are unlikely to appear on payday loans, but it is wise to check. Contact the lender and ask them about it so that you know for sure whether it is worth paying back early or not.
Even if you cannot repay the entire loan early, it can be worth repaying part of it. This is because the interest is based on the amount that you have borrowed, so the lower the amount owed; the lower the interest charges. So if you do find that you have some money available, then use them to repay the loan or some of the loan and you will find that you can save money.
If you repay late, then there will be extra charges and so you want to avoid doing this if you can. As well as being charged interest for longer you will be charged a fee as well and so this can be expensive. It is therefore worth coming up with a plan that will enable you to ensure you are able to repay the loan on time so that you can pay the least amount possible for it.
It is well worth having a plan in place to help you make the repayment on time. This could be to make sure that you keep spending to a minimum leading up to the repayment date, that you try to earn a little extra to help towards it or that you sell some things that you own to make money that you can put towards it. Make sure that you only spend on essentials and you take up every opportunity to earn extra money and you should be well set. Whatever your plan, anything that can help you to balance the budget more easily will be well worth it as it will give you a better chance of paying the loan back more quickly which will save you money.
Longer Repayment Terms
Although most payday loans are organised to be repaid in full when you next are due to get paid, there are some available now that have a longer repayment term. This means that you will not just pay one lump sum, but spread the payments over a few months. This will be more expensive and so you could be tempted to just reject the idea. However, it is worth considering this if you think that you will struggle to raise enough money to pay back the lump sum as otherwise you could face a late repayment charge which will be even more expensive. Even if you are able to pay off the lump sum, there is a chance that you will find it difficult to manage your money for the rest of the month. Trying to make it stretch when a large lump sum has gone out neat to the beginning of the month could be really tricky. So again, paying a bit more to spread the payments across several months could be worth it. If you consider how well off you tend to be each month and how much spare money you have available, it will give you an idea of how well you are likely to manage with less money. If you know that it will be really tight, then it could be worth spreading the loan repayments out to reduce the burden. Paying more for the loan could be worth it if it makes it more manageable.
So you can see that by limiting the length of your loan it would usually be cheaper. This means that you should take out the loan as late as possible so that it is as close as it can be to your pay day and therefore you do not have it for long. If you can repay it early, as long as there is no fee, so that you can save money on interest. Make sure that you do not pay it back later than the agreed date or else it will get very expensive.