A payday loan is essentially a short-term but high-interest loan 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 lending infrastructure, the amount usually depends on how much you earn from your job or business. So when you apply for a loan, you must give the lender a payslip. They check the whole thing first and then set the amount.
While almost anyone can apply for a payday loan in Ireland, it may not be available in every city. So before you make any move, do a little research on this aspect.
How does a payday loan work?
As mentioned earlier, a payday loan provider will ask you to provide proof of your total income. As a rule, it is sufficient to submit your employer’s payslip.
Once they have checked everything, they will lend you whatever amount you may need. Once you receive the money, you have a short time (~30 days) to pay it back.
Generally, a payday lender does not evaluate your ability to repay the money you will take from them. Therefore, for them, the risk of losing their money tends to be quite high.
Because of this, they tend to charge extremely high and absurd interest rates from you. Also missing your repayment date can be quite a mess in your case.
Well, that doesn’t bode well for a borrower as you may have to take out another loan to cover the first one. And the circle could continue until you are stable enough.
How Much Does a Payday Loan Cost?
As mentioned, the cost of a payday loan can be much higher than usual. For example, if you took $100 from someone, you might need to offer another $10 to $30 total. In some cases, it can get even higher.
Therefore, before taking out a payday loan, we urge you to do as much research as you can about the loan. And don’t forget to use a calculator for your purposes as well.
It will help you get an idea of the amount you have to pay. So you can make a plan about the same in advance and avoid any kind of misfortune.
how much can you borrow
Unfortunately, the amount of the payday loan depends on your annual income. In addition, it can also change taking into account the laws of the city where you currently live. Therefore, before taking any step in this regard, we encourage you to do proper research in this regard.
Typically, when applying for a payday loan, you can get anywhere from $300 to $1,000 as a rule of thumb. With a higher income, however, the amount can increase even further. Talk to your moneylender for more information on this.
Can You Build Credit With Payday Loans?
Since a payday loan is a short-term lending method, many people consider using it to take care of their low credit scores. Unfortunately it doesn’t work that way.
Most payday lenders don’t report your crime to Schufa at the right time, so they can’t file your records right away. However, here’s the catch.
If you don’t repay your loan, your creditworthiness will be massively damaged. The payday lender in this case will report any credit problems to the bureau. yes they will
In some cases, they may also sell your debt to the collection agency that contacts the bureau. And that will reduce your credit score to some extent.
The final result
A payday loan is essentially a high-risk, low-return investment. So we don’t think you can get much benefit from taking it. However, if you think you can return all your borrowed money, then go for it. Just make sure the person informs the office that you will return the money on time. It will help you increase your credit score.