5 Questions To Ask Yourself Before You Get A Payday Loan

Published: November 7, 2022
By the Pachyy Editorial Team
The Pachyy Editorial Team comprises a diverse and experienced team of writers, researchers and subject matter experts whose aim is to provide you with useful insights, guidance and commentary on all matters related to your personal finances.

Before you submit a payday loan application, it is important that you are aware of both the benefits and drawbacks of taking out a payday loan. Taking out a payday loan for the wrong reasons could result in you seriously damaging your financial wellbeing. However, used correctly, a payday loan can be an invaluable tool, helping you take care of life’s unexpected events and build your financial health.

1. Is a Payday Loan Right For Me?

If you have incurred an unexpected cost and need help paying it before you receive you next payslip, a payday loan could be the best option for you.

Payday loans are designed to be short term loans that are paid back when you receive you next payslip. Rather than borrowing an unnecessarily large amount for a long period of time and paying thousands of dollars of interest on the loan, a payday loan is designed to be paid back in a couple weeks with a couple dollars interest.

If you need to borrow money for a long period of time, a payday loan is not right for you, and you should rather consider a collateral loan.

If you do not have a consistent income stream, a payday loan may not be the best option for you because you could accumulate a lot of interest on your loan. 

2. What Should A Payday Loan Be Used For?

Payday loans are designed to assist individuals that have a consistent income and who have incurred an unexpected expense and do not have the cash available to cover it before their next payslip.

Typically, individuals use payday loans to cover unexpected:

  • Medical bills
  • Legal bills
  • Funeral costs
  • Auto repairs

3. Who Should I Borrow From?

Unfortunately, some payday lenders have a reputation for charging individuals extremely high interest rates (APR) and engage in unethical lending practices.

Therefore, it is extremely important to consider who you are borrowing from and to compare multiple lenders. You can do this by using online loan comparison websites such as Pachyy.com.

At Pachyy, we only work with fair, affordable and ethical lenders that share our mission to improve the financial health of our customers. With Pachyy, you can make a payday loan application for free in under 5 minutes. The application will not affect your credit score, you will be given multiple options from the most affordable and ethical lenders and you have no obligation to take a loan (you can compare various options for free!).

4. How Much Should I Borrow And For How Long?

Various lenders have different limits on what you can borrow as a payday loan. Depending on the lender, you can typically borrow $100 – $30,000 as a payday loan. However, you should consider that payday loans are designed simply to tide you over until you next paycheque and therefore, you should never borrow more than you can reasonably afford with you next payslip.

Similarly, you should never take out a payday loan for a long period of time. There are much more affordable long-term loan options than payday loans.

5. Am I Eligible For A Payday Loan?

Various lenders have different requirements for lending but with our extensive network of lending partners our aim is to be able to find you the most affordable loan no matter what your personal circumstances.

We help provide loans to individuals with low credit scores, those who are unemployed, as well as those with a strong credit history.