There are certain types of loans which can only be used for one purpose. For example, you can only use a mortgage to buy a home or a student loan to pay for a course. However, there are many other bad credit payday loans which can be used to buy anything and a same day loan falls into this category. However, there will be some restrictions still, because of the nature of the loan.
How much you can borrow
All loan will have an amount that you can borrow up to and for some lenders this will be determined by the borrower and their credit record. With a same day loan, the credit record is not taken into account when the lender decides how much money they will be lending. They use a different approach towards risk. They are happy to lend to anyone over the age of 18, that is a UK resident with a bank account and regular income, regardless of their credit score. This is because they were set up to help these specific types of borrowers who do have a poor credit record and struggle to borrow elsewhere.
However, this does mean that the lenders are taking a risk with the loans. They therefore only lend small amounts of money. For a first-time borrower, they may only lend a few hundred pounds. Once this is repaid in full and on time, then they will feel they can trust the borrower and will be willing to lend them more, if they need it. They will lend up to £1,000 but if you need less, then they will lend you less.
This does mean though, if you need a large amount of money, then the loans will not be suitable for you. If you want to buy a house or car then this will not be anywhere near enough and even for things like house or car repairs they may not be suitable.
How long you can borrow it for
With some loans you can borrow money over a long period of time. This is good if you borrow a lot of money as you will be able to spend a long time repaying it in small instalments. However, some people prefer a loan not lasting very long and this is where a same day loan can be helpful. These loans have to repaid within a very short period. You have to repay the loan when you next get paid. This means that you may have the loan for a few weeks or perhaps even just a few days. This can mean that you will really only be able to buy something small.
The reason for this is that you have to repay it all in a lump sum. If you borrow too much money you will not be able to afford to repay it all. If you miss the repayment you will get charged extra money and this is not ideal.
It is therefore really important to make sure that you are capable of repaying. Take a careful look at your personal finances and calculate if this is the case. Make sure you find out from the lender exactly how much you will need to repay. Then you can properly work out whether you will be able to afford it. You will be able to look at past bank statements to see how much money you normally have coming in and how much you normally pay out. Then you will be able to see whether you have enough.
If you feel that you might struggle it does not mean that you will have to abandon the idea totally. You can think about ways that you can make it easier for you to manage. This could mean cutting down your spending in some areas. Many of us buy a combination of essential and non-essential items and if we can cut down on the items that are not essential, then we might be able to free up enough money to be able to afford to repay the loan. Even if we cannot do this we might be able to pay less for our essentials by comparing prices on the things that we buy and opting for cheaper options. It might also be possible for us to raise some money. This might be possible by doing extra work, taking on a second job, selling things we own, doing some online work or freelancing. There are lots of options that you could consider that could help you. Do make sure that you have a plan though and that you are prepared to follow it to ensure that you are able to repay it.
As you cannot borrow money for that long it will restrict how much you can borrow and therefore what you can buy with the money.
So, you can see that you will need to think carefully about what you use a payday loan for. Not because there are any specific restrictions but because of the amount that you are allowed to borrow and the amount that you will be able to afford to repay.