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Can I Use a Payday Loan to Buy a Car?

There are lots of people that have not used payday loans before and therefore will have a lot of questions about them. Many people might wonder whether they can be used for specific purchases, such as to buy a car. It is worth knowing that there are no restrictions with regards to what you are allowed to buy with the money, but there could be restrictions due to the nature of the loan. So, although, you could buy a car with the money in theory, in practice it might not be the best idea or it may just not be possible. There are few reasons for this which are worth thinking about.

Amount of Money you Need

It is worth being aware that payday lenders tend to only lend between £100 and £1,000 at a time. This might be enough money for some people, but it will all depend on how much the car costs that you are thinking of buying. There are also possible restrictions made by certain lenders. There will be some lenders that will only lend a few hundred pounds to first time borrowers. This is because they lend to people regardless of their credit score and want to build up trust with them. They will therefore only lend a small amount of money to start with and if that is repaid on time, then they will lend more. So, if you need more than a few hundred pounds, then you may not be able to borrow enough. However, it can be worth approaching different lenders to find out what they are prepared to lend you and you may find one that will be able to help you out.

Repayment

It is worth being aware that the repayments on emergency loans are made in one lump sum on the next day that you are paid. This means that you only borrow the money for a small amount of time. This could be great for those people that do not like being in debt for very long, but it does mean that a large sum of money will need to found quickly. This can be okay as you will pay it on the day that you are next paid and so there will be money available but you will need to check to make sure that it will be enough. Bear in mind the fact that you will need to pay for other things as well and you will probably have other payments also going out of the account and so you will need to take a look first, note down the figures and calculate whether you will be able to afford the repayment. It is likely to be within a few weeks of when you take out the loan so you will not have long to find the money to pay for it.

Cost

All loans have a cost and it is a good idea to make sure that you find out how much this will be. Remember that this cost will add to the cost of the item that you are buying with the loan and it is a good idea to find out how much it is. Consider whether you still think that the item is worth buying if you also add in the cost of the loan that you are using to buy it. The lender should be able to tell you what the cost will be, so ask them and then you can consider whether you think that it will be worth it. It is a personal thing as to whether you feel it gives value for money and therefore up to you to decide.