When money is short, you tend to think of every possible place that you can get cash. One thing to consider is a payday loan. While these loans are not the best option for everyone, they can definitely get you out of a bind when you are feeling financially stressed. Like any loan, however, it is best to think of all the advantages and disadvantages before you sign the papers. The more ignorant you are about your actions, the worse off you are. Take time to weigh the pros and cons before signing the papers for a payday loan.
Pros Of A Payday Loan
A payday loan in unlike any other loan, because you can get your money on the same day you apply. In some instances, you may need to allow twenty-four hours for processing. For most cases, though, you can walk into the loan office without making an appointment. You can also apply online with some loan companies.
The information that the loan office asks for is simplified. Because there is nothing being put up for collateral, all you need is your name, social security number, address, and source of income. With a majority of the payday loan offices, as long as you can prove that you work, you will be qualified for a loan. A pay stub is usually the best proof and will ensure a guaranteed loan.
With payday loans, bad credit or no credit does not affect your chances of approval. In fact, credit checks are not done that often, giving anyone a chance to borrow money when they need it. The only thing the loan office is concerned about is getting their money back. As long as you can pay the monthly payments, you should not have any trouble getting a loan.
Cons Of A Payday Loan
Applying for a payday loan might be easy, but you must consider the consequences, too. The interest rates, for example, are extremely high. Because the loan office is taking a risk by borrowing you money, they have to set the interest rates higher than normal. There is no collateral protecting their assets, so if you do not pay back the loan, you will pay the consequences.
Be cautious with how much you can borrow, so you do not end up paying late fees on top of your regular payments. Do not let the amount of money cloud your vision; otherwise you will put yourself in a bigger financial bind. Remember, the more money you borrow, the more money you will have to pay back. Keep in mind, also, that by the time you pay your loan back, you will have paid at least double the amount that you borrowed.
If you cannot pay your loan back, for some reason, you will be in a very bad financial situation. Not only will you have to pay back the original amount that you borrowed, but you will also have to pay back the late fees and penalties that have piled up. The more delayed your payments are, the more penalties you have to face. In addition, your interest rate will go even higher, causing you to spend three times more on interest than on the actual principle.
The cons of a payday loan tend to outweigh the pros, but if you are knowledgeable about what you are doing, then it should go okay. Do not borrow more than you can pay back, and keep your monthly payments affordable.
In the present economy, no matter how hard you try to save your money, your earnings are not enough to pay for the bills that you need to pay. Although you already anticipated these bills, there are times that you cannot help but spend your hard earned money especially during emergencies that can sometimes be overwhelming. You may foresee these emergency situations yet sometimes you need help from your family, friends and other times banks to help you when you are in a difficult situation. For others they turn to payday loans for aid when it comes to money. There are many advantages of payday loans. For example, there are payday loans online so it means faster application, no need for grueling interviews especially when you need the money badly, relationships are not in jeopardy, and many more which makes payday loans a great help when you need money.
Defining Payday Loans
A payday loan can be accessed online and this is helpful especially when there is a need to produce money fast. It is a cash advance scheme but only for a minimal amount of time and the money is directly deposited to your existing bank account. Companies offering payday loans seek to aid their customers in times when they need to spend money on bills that they need to pay immediately and cannot wait for their monthly salary. In this way, payday loans can help its customers by maintaining their financial stability and not stain their reputation with their creditors. Moreover, payday loans are faster than other loans offered by banks because the money is transmitted directly to your bank account and you can use the money right away. The amount that you borrow from payday loan companies, including the charges for the loan, is automatically deducted in your next salary. By the time comes when you already paid for your payday loans, you are not just able to save your credit status as well as adding more taxes to your income.
Cost of a Payday Loan
Payday loans may be an answer from heaven but you also need to be careful so you do not end up getting more bills to pay. It is safer to ask questions about the payday loans from the companies that offer them before signing the contract such as the fee that the company charges if you pursue getting a payday loan from them. You can ask the representative of the company to translate the figures in layman’s term so that you could fully grasp the amount of money that you need to pay. For instance, if you need to borrow $150, ask about what exactly is the amount that you need to give back to the company to cover your cash advance. There are companies that offer $20-30 in every $100 that you borrow and there are others who offer a much lower charge. There are states that control the percentage that can be charged in payday loans, and surprisingly even in that rule, you can still make an arrangement with the company to make the payday loan in favor of your capacity as a borrower. You need to scan every company that offer payday loans so that you will have clear view of the choices that you have.
Moreover, to prevent misunderstanding along the way, you can ask all the possible scenarios that may happen if you borrow money from cash advance companies such as if you cannot pay the additional charge for the loan and other payment options. Knowing the nooks and crannies of a certain loan will help you decide if that specific company offers the payday loan that is right for you. Remember that being fully aware of the situation that you are going to enter is the best prevention that you could do to protect yourself from being used by an opportunistic company. Payday loans may be of great help during emergencies but you also need to be careful when dealing with cash advance companies. You need to make sure that you can pay the loan and the additional charge of the loan in the future so that you will not find yourself in a sticky situation.
There are times that you just need help when it comes in dealing with your bills. Although there are many sources of money that one can turn to in times of need, you simply need to be cautious so that you do not end up as victims. Being knowledgeable about the options that you have is a good way to protect yourself from crooks especially your money that you save for a long time. This is just understandable because raising a family is not a walk in the park. You not only have to think about saving money for the present expenses of the family but also make room for emergency situations. You do not want to be faced with a problem with no solution at hand. That would be a suicide. Thus, everything should be clearly planned.
If you think of turning to payday loans as a way to pay for the bills that you need to pay right away such as in emergency scenarios, you need to think of the consequences of your action. You need to think about the how you can pay your debt and the additional charge with your current salary. Here are some tips that you need to ponder when you choose payday loans as a solution to your money problems.
- Before choosing payday loans, you need to make sure that you can pay your debt and the additional charges.
- When it’s time to pay your debt, as much as possible do pay it on time. This will make your financial status look stable to the creditors.
- Upon signing the contract between you and the cash advance company, make sure to read the document from top to bottom.
- Think about other source of money before turning to payday loans like your family and friends.
- You need to be straightforward with the cash advance company and present updated deposit information and precise bank statements. In this way, the company will not have any reason not to approve your request.
- When you need to pay your debt, schedule the payment date on your payday so you have the money to pay your debt on time.
- Payday loans are just last resort when you need money suddenly. Instead of always using payday loans during your times of need, you can practice saving up for your emergency fund right now. This will help you in times when you need money desperately. Just bear in mind to replace the money if ever you use your emergency fund so that it will never run out.
- If you always use payday loans as a way to cover your expenses, maybe you need a professional help, credit counseling to be precise. The counselor will guide you on what are the things that you need to change to strengthen your financial stability and prevent relying too much to payday loans.
- Make sure that you have enough money to pay the payday loan when the payment is due or else you need to pay a lot of fees such as the late payment, the withdrawal, and if you issue a bounce check.
- Do not be a victim of opportunistic cash advance companies. If you feel that they violated the contract, you can tell the authorities right away. Know your rights.
When you are aware of the things that are listed above, then you can get a clear view of the things that you need to expect before signing a contract to any companies that offer payday loans. Preparation is the key to defend you from unfair contracts so just in case, you can keep all the bank statements, phone conversations, and emails that you can use if the worse comes to worst.