A payday loan, in essence, is a short-term yet high-interest loaning structure. It’s available to almost every consumer out there and doesn’t require too much paperwork.
But, there’s a catch.
Unlike any other borrowing infrastructure, the amount usually depends on how much you do earn from your job or business. Hence, when you’re documenting for a loan, you have to give a pay stub to the lender. They will check the whole thing first and then determine the amount.
While almost anyone can apply for payday loans ireland, it might not be available in each and every city. So, before you make a move, do a little bit of research in this aspect.
How Does A Payday Loan Work?
As mentioned before, a payday loan provider will request you to show proof of your overall earning. Usually, showing your pay stub from your employer will be enough in this aspect.
Once they’ve reviewed everything, they’ll then lend you the amount you may need. Once you get the cash, you’ll have a short period of time (~ 30 days) to pay it back again.
Generally, a payday lender won’t evaluate your ability to pay back the money you’re going to take from them. Hence, for them, the risk of losing their money tends to be quite high.
Due to this reason, they tend to charge an extremely high and absurd interest from you. Also, missing your repayment date can also be quite a mess in your case.
Now, this won’t bode too well for a borrower, as you might have to take another loan to cover up for the first one. And, the circle might continue until you’re stable enough.
How Much Will A Payday Loan Cost?
The cost of a payday loan can be much higher than usual, as mentioned before. For example, if you have taken 100 Euro from someone, you might have to offer an additional 10 Euro to 30 Euro as a whole. In some cases, it might get even higher than that.
Hence, before you take a payday loan, we’ll ask you to learn about the loan as much as you can. And, don’t forget to use a calculator for your purpose as well.
It’ll help you get an idea regarding the amount you’ll need to pay. Thus, you can start making a plan regarding the same beforehand and avoid any kind of calamity.
How Much Can You Borrow?
Unfortunately, the amount of payday loan you can get will depend on your annual income. In addition to that, it might also change considering the law of the city you’re currently living in. Thus, before you take a step in this aspect, we’ll ask you to do proper research in this regard.
Usually, as a rule of thumb you can get somewhere between 300 Euro to 1,000 Euro when applying for a payday loan. But, if you have a higher income, the amount might increase even more. Do talk to your money lender to get more information in this regard.
Can You Build Credit With Payday Loans?
As a payday loan is a short-term borrowing procedure, many people consider using it to take care of their low credit score. Unfortunately though, it doesn’t work that way.
Most payday lenders don’t report about your deed to the credit bureau at the right time. Thus, they don’t get to put your record in the same. However, here’s the catch.
If you don’t pay back your loan, your credit will get damaged massively. The payday lender will report all the credit issues to the bureau in that case. Yes, they’ll do it.
Also, in some cases, they might sell your debt to the collection’s agency who will reach out to the bureau. And, that’ll reduce your credit score to some extent.
The Bottom Line
A payday loan, in essence, is a high-risk, low-reward investment. Hence, we don’t think you can get much of a benefit by taking it. However, if you think that you’ll be able to provide all of your borrowed money back, then go for it. Just be sure to tell the person to let the bureau know about you giving the money back in time. It’ll help you increase your credit score.