There are lots of different loans and the repayments can vary. However, it is always important to repay the loan on time or else you will face getting extra charges and no one wants to pay more than necessary. Therefore, it can be wise to take on a loan which you feel will be easy for you to be able to repay. So, look at the loans that you are considering and find this out. For example, with an online loan you need to know how you repay and whether that will work for you.
How you Repay an Online Loan
An online loan is different to many other types of loan in the way that you have to repay it. Rather than repaying in multiple instalments, you have to repay everything that you have borrowed plus the interest and fees in one lump sum payment on the day that you are paid. This is done because the loans are designed to be a lump sum hand out to keep you going until you are next paid. However, it is made easier for you by the lender setting up a direct debit. This will be put in place so that the money will leave your account automatically and then you will not have to remember to pay it. This will make things a lot easier as you do not want to forget to repay as that will be expensive for you.
Will I Afford This?
However, as the money does go out in a lump sum, it is well worth asking yourself whether it is something that you will be able to afford. It is easy to think that you will be able to repay it easily because the money will be in your bank when you get paid, but you need to be wary and check a few things –
- Check the pay will be there – it is a good idea to make sure that you get the date right and that the salary will be in your account on the date the payment goes out. You will need to make sure it is paid in or else when the payment gets taken the money may not be there and then you will be charged. The payment could be taken early in the morning or even at midnight, so make sure that your pay will arrive on time.
- Check it is enough – check how much you are going to be paid and make sure that it will be enough to cover the repayment. We do not always get paid the same amount of money and so we might need to think about whether the next pay packet will be enough to cover the repayment.
- Consider any other direct debits / standing orders – you may also have other payments going out on that day, which may mean that there will be less money left to pay the loan. Check to see what money is due to go out, you should be able to see this if you bank online pretty easily, but otherwise speak to your bank to find out.
- Can you manage everything else? – It is also wise to make sure that you check that you will also be able to manage everything else that you will need to pay for. As well as the regular direct debits and standing orders, we also buy other things through the month such as food and petrol and we will need to make sure that there will be enough money left for this as well as everything else we have to pay for.