In order to understand the truth about advance payday loans, one needs to understand what a payday loan entails and how they work. A payday loan is a type of loan in which a person who is employed can borrow money from their existing paycheck in advance. There is a fee to borrow the money and it is set at a fixed rate. The lender gives the borrower a set time frame to pay the loan back. This seems very simple but as in all things, there are consequences and complications if not handled properly.
Reasons Behind Payday Loans
Most people do not usually require a payday loan but there are certain circumstances that warrant quick cash. The car breaks down, your child gets sick, you need immediate house repair, etc. These loans are actually very short term and are based on your payday schedule. If you borrow money, you normally do not have over fourteen days to repay the loan. When your next paycheck is due, the loan must be repaid. You usually give the finance company a pre-dated check authorizing them to obtain the money the same day as your payroll check is submitted to the bank by your employer. The loan has a short term for repayment so the interest rate will be very high.
Problems Getting a Loan
It is always best to check your credit score to find out if you are entitled to get a credit card that will not be as expensive as a payday loan. If you need $300 to fix your car, it would cost you approximately $340 from a payday loan while a credit card interest would be much less. You would have to pay this amount back in two weeks’ time. With a credit card, you could make small monthly payments which is to your advantage. Most people rely on payday loans in order to get the financial help they need immediately because of the inability to get credit. For instance, if you have a utility bill that is about to be shut off, then quick cash is a necessity.
Payday Loan Benefits
You are paying out a much higher rate to get money in this manner, but for some, the benefits are especially good. When you are unable to get quick cash for that emergency situation, this is a great way to get the money you need. Your credit is not usually checked, and instead, it is your employment and what amount of money you earn that are taken into consideration. You must be able to pay the loan back so you are not permitted to borrow more than your income allows. A checking account is required in order to make this type of loan to enable you to pay the money back without problems. Payday loans are helpful in emergencies, going on vacation, or to purchase something very special. Most people use these loans because they have credit problems and are trying to get back on their feet.
Advance Payday Loans Advice
There are many places where you are able to find a cash store in your community and get an advance payday loan. However, it is possible to obtain advance payday loans online. The problem there is to make sure they are a reputable company and will only deduct the right amount of money at the proper time from your checking account. There have been cases where a cash store has taken out double the amount, takes out the money two different times, and even keeps taking out the money. It is much easier and safer to deal with local cash stores. While payday online loans may sound convenient, it is always more sound to make this transaction in person.
The Question is, Should I Take Out a Payday Loan?
Only you are able to answer if you should take out a payday loan or whether there are better resources that would be a better fit in your situation. In some situations, the garage might let you make payments on the repair bill. The utility company might let you make payment arrangements. In other situations, money is the only answer and an advance payday loan is the only solution to your problem. Just remember you will be required to repay at a higher rate of interest and at a much faster time period.
Featured Image Source: Thinkstock/smutnypanPosted on May 22, 2023