A payday advance loan should only be taken out when required. This could be for an emergency or for other immediate needs that you do not have cash available for. Even relatively small loans such as those offered by payday advances are still debt, and you should plan carefully when applying for them. It is quite tempting to apply for a larger amount than you require, especially if you qualify for a higher amount, but these are a few reasons why you should not take more than you need on a payday advance. Here are a few of them.

  • Overall Debt: We sometimes look at loan amounts as free money and it is tempting to take as much as we can get if it helps reduce the pressure of financial commitments. However remember a loan is still debt and it is wise to try to keep all debt as low as possible.
  • Higher Instalments: Taking a higher amount means that the instalments will be higher for the same repayment term. Consider your current monthly costs to decide whether you can comfortably pay an increased premium as part of your budget.
  • Term: You may be able to keep your budgeted instalment amount the same if you increase the term. This means the loan takes longer to pay off. You should weigh up the pros and cons and determine if taking a higher payday advance amount is worth the longer settlement term.
  • Interest: The more money you choose to take on a payday advance, the higher the interest. Interest charges vary from one service provider to another. Do some calculations to find out how much extra you will be paying before applying for more than you need on a payday advance.
  • Cautious Approach: Even if you can afford a higher instalment, it is good to take a more cautious approach. This allows you some flexibility for other financial needs that may arise during the course of the loan term.

Ideally, a payday loan is something that will take at the very most three months to pay off. Make sure to calculate what your additional monthly payments will be, including interest. You might be able to cut back on a few luxuries and pay it off sooner rather than later.

If you need a payday advance in Auckland, or other financial loans services and advice, get in touch with Acorn Finance We can help guide you and assist with a solution that best meets your financial needs and personal situation.