You may need a payday loan or an instalment loan to help you out in an emergency situation when cashflow problems leave you temporarily unable to pay priority bills. Council tax is an essential bill with various enforcement actions available to the council if you fail to make the repayments on time or accrue serious arrears. In months where money is tight or an additional unexpected payment arises, managing your usual non-discretionary expenditure can be difficult. This is why it’s not uncommon for people to get a short term loan like a payday loan to bridge the gap between paydays when cashflow issues occur.

What can go wrong if I don’t pay my council tax?

Your council has legal powers that it can use against you if you fail to make your council tax payments. This can add legal costs to the amount you owe, or if bailiffs are sent to seize your assets as compensation for the debt, then you can incur additional bailiff charges as well. Councils can also enforce your payments through deductions from your wages before you’ve received the funds into your bank account – though you’d never be left without sufficient funds to cover your living expenses if this happens.

How does a payday loan help me pay my council tax bill?

There are several reasons why you might be looking to borrow money now to pay your council tax:

  • you may receive your council tax bill at an inconvenient time in the month compared to when you get paid
  • you may have recently had a council tax increase that you’ve not yet budgeted for
  • you may have received an arrears notice that requires immediate repayment to avoid potential fines

Payday loans can help you smooth out financial bumps if your money is really tight one month and you have one too many bills, but they should only be used when you know you can afford the repayments and not as a frequent borrowing option. If you are struggling to meet your council tax payments month on month, there may be a deeper issue that you need to address. You can get council tax arrears advice from StepChange, which is a free debt advice charity. They can also help you assess your income and expenditure and readjust your budget to accommodate your current financial commitments. You should also think about contacting your council directly and explaining your circumstances as they may be able to help you organise a payment arrangement to make it easier to repay any existing council tax arrears.

What to think about before applying for a loan?

When you apply for short term credit, you will be asked to provide information about your monthly income and expenditure as part of the application process. It’s important to be honest when completing this part of the form and it might be a good idea to check a recent bank statement to ensure your figures are accurate. Some lenders use Open Banking to get a better picture of your finances, and your application could be declined if the information in your application form and your Open Banking report don’t match up.

What if I think I can’t afford the repayment amount?

Don’t take out a payday loan if you knowingly cannot afford to make the repayment. While you might be in a tight spot right now, missing your repayments can cause serious money issues and negative information will be recorded on your credit file, making it harder to obtain credit in the future. Consider the other options that might be available to you like an existing low interest rate credit card or overdraft or contact your council directly to make them aware of your issue that month. You may be able to pay over 12 rather than 10 instalments per year or you may qualify for a Council tax reduction, or just a short-term discount.

Payday lenders want to help

If you’ve already taken out your payday loan and something crops up which means you can’t make your repayment on time, the best thing to do is to make contact with your lender as soon as possible. Payday lenders know that things don’t always go according to plan, so explain your situation as fully as you can, and they can help you set up an affordable repayment arrangement that you can stick to until you’ve repaid the full amount owed. This may include token payments for a temporary period or just smaller individual repayments over a longer period. You should always aim to repay any debts as soon as you can reasonably afford to do so as any payment arrangements will be recorded on your credit file.

Why choose a payday loan?

A payday loan with means you can borrow the amount that you need for the length of time that suits you. With flexible repayment dates and instalment loans available, you should be able to find a short term loan that fits your schedule. Online lenders also know that you might not have a great credit history, and so they won’t reject your application based on your credit score alone (although it will be considered as part of the affordability and creditworthiness assessment). However, a short term loan is only there to help you resolve a temporary cashflow issue, and you shouldn’t rely on payday loans as a form of income. Think carefully about how all your expenses contribute towards your overall monthly expenditure and whether a better budget could help you meet your financial commitments more easily.