Things are tight financially, but then the unthinkable happens. It doesn’t have to be anything huge to cause a horrible chain reaction. Maybe your car has a problem, or a family member ends up in the hospital, or a major appliance like a washer or dryer stops working. Finances were already stretched too thin, and there’s literally no room for anything to go wrong, but it did. Now you are in a huge bind with no money to help bail you out. Where are you going to get an extra $300 to $500 bucks to get you through the hole and back to safety?
There are lots of options out there, and one of them is a payday loan. But are they worth it? What is a payday loan, and how does it work?
A payday loan is a type of short term loans that offer temporary financial assistance. You may have heard of a payday loan by another term like:
No matter what you want to call it, they basically have the same terms and work the same way. The names of a payday loan might include things like:
A payday loan is considered an unsecured loan, which means no collateral is put up to secure it. The requirements to get a payday or short term loan might include:
A payday loan is one of your most expensive options when it comes to getting some extra cash to help out with an emergency or bills. With that being said, it is still a legitimate way to obtain additional funds when you need them. The interest on a payday loan is high, especially if you think about APR or annual percentage rates. The actual APR can be a few hundred percent. For instance, you may pay as much as a $20 fee for borrowing $100.
Getting a payday loan is a relatively straightforward process and will not take but a few minutes. You will need some documents so that the process is not delayed. When you stop by the payday loan facility, you should have your driver’s license, latest paycheck stub, and bank account information with you. As long as these are legit, they can set up the loan for you. Different facilities have various procedures to follow, and states have other regulatory requirements. However, you typically will write a check to the payday loan company for the loan amount plus the finance fees. It will be cashed on your next payday. In some cases, the agency might take it out of your account on the date indicated. And if you are not going to have the full amount in your account on the right day, you may be able to work it out so that it’s done in multiple payments. This option, however, will usually cost you more interest.
When you are in a pinch for money and need to get some right away, a payday loan might be the perfect solution. You may not even care if there are more advantages to getting payday loans. But there are a few benefits of getting this type of loan. They include things like:
Payday loans can be a great resource when you find yourself in a financial bind. They are convenient and quick. But there are also a few disadvantages that you should be aware of such as:
Before you take out a payday loan, it’s important to weigh the pros and the cons. Another piece of advice is to consider some of the other alternatives too. Sometimes there are other methods of obtaining extra money that might work out better in the long run. A payday loan is useful, but so are these alternatives:
These are all viable options that, just like a payday loan, can get some usable cash in your hand when it’s needed.
This is a question that only you can answer realistically because no one else is living in your circumstances. A payday loan is definitely a solution to getting some on-hand cash when you need it. Remember that it is just one option you have available to you. Before you get a payday loan, there are a few things you should think about:
As long as you know exactly what you are doing, a payday loan can help get you out of a bind. Take time to think about it and consider other options. Each person’s situation is unique from all the others, and in many instances, a payday loan may be just what you need to get out of a pinch.