Financial emergencies can happen, no matter how cautiously you plan your life.Sometimes you can end up being in a tough situation where you have to cover costs that are outside your immediate means.

If you’re cash strapped with no other options, a payday loanmight be an option you can rely on. Theapplication process is fast and you can get access to money quickly, without the usual paperwork when trying for a personal loans.

But before you consider applying for a payday loan, there are some factors you need to consider in your decision-making.

Are you eligible?

Your credit score is not an issue when applying for a payday loan. However, there are several other requirements you need to meet for approval, including:

• You need to be a resident ofthe same state where you are applying for payday loan;
• You will need to demonstratea regular source of income and payslips;
• You will need to provide bank account information including abank statement for the past 90 days and your.

How much can you afford to pay back after you receive your payment

Payday loan repayments are deducted from your bank account by the lender when you receive your salary or wages.You don’t want to end up with a low bank balance meaning that you need to take more loans.

Therefore, it is crucial to know how much you can afford to pay.This will help you decide the size of the loan you are applying for and will mean you can service it without needing to resort to other forms of finance.

You should never borrow more than you can afford, even if it is offered. You should always look to borrowonly as much as you need and can pay back on time.

Loan costs

Payday loans are an expensive form of debt compared to personal loans from a bank, for example. However, with considerable competition in the payday loan market and easy online access, it pays to shop around and compare the fees and costs between different lenders.

Payday loans are highly regulated in Australia, and there limits to what can be borrowed and how much you can be charged. This is intended to avoid the risks of high cost debt spiral. But you also need to be very careful whenselecting your lender.

Risk

Payday loans are a relatively easy form of finance to secure,even if you don’t have a good credit score. However, borrowers need to understand the risks as well. While a payday loan might be a temporary solution to your financial circumstances, failing to service the debt will incur additional costs and fees which can exacerbate the financial difficulties.