If you have to get a payday loan, it’s nothing to be ashamed about. But if you can avoid it, do so at all costs.
Is your piggy bank looking a little skimpy? If so, you might be tempted to take out a payday loan. But before you do, weigh the pros and cons. When you need fast cash, it’s a great option.
Unfortunately, most people regret it later down the line. On average, 12 million Americans borrow cash loans each year. That’s a lot of sad faces.
However, you can avoid that regret by carefully thinking things through before borrowing money. With that said, take a look at the information below to learn the right circumstances to get a payday loan.
What Is a Payday Loan?
A payday loan is funds given to you buy a lender with the expectation of repayment, plus interest. It’s known by other names like cash advance, short-term loan, bad credit loan, paycheck advance, or cash loan.
In most cases, you can apply for payday loans online or go to a physical location.
The process is relatively easy and you’ll have to provide information like proof of income. When your bank account is low, a cash loan can save the day. However, it shouldn’t be your first option.
These are some of the reasons you should take out a payday advance:
There’s No Other Option
If you’re strapped for cash and there’s absolutely no other option, then consider taking out a payday advance. But if you can borrow money from a loved one, do so.
Also, if whatever you’re needing the cash for can wait, hold off for a little while. The interest you pay back might not be worth borrowing if there’s another way around it.
It’s a Dire Situation
Another reason to take out payday loans is if it’s a dire situation. If you’ve been out of work and you’re facing eviction, but you get a paycheck soon, it’s okay.
Also, if you have an emergency then that’s a good time to get a payday loan too. For example, if a family member is sick and you need to buy a last-minute plane ticket.
If You Know You Can Pay It Back Soon
Payday loans have that name for a reason. The lender will expect you to give them back the funds as soon as you receive your paycheck.
However, if you have other financial obligations, it’s not a good idea to reach out to a payday loan organization.
If you borrow the money and you know that you’ll be able to pay it back quickly, then it’s fine.
A Closer Look at Payday Loans
If you’re new to getting cash loans, you may not understand the skepticism that most people have about them.
While getting a pay advance isn’t always a bad thing, it can get you in a bit of trouble. Below are some things you should look out for:
Be prepared to pay expensive interest rates on the money that you borrow. Obviously, a payday loan organization is a business, they don’t lend money for charity.
Therefore, the longer you take to pay them back the more you end up giving them back on the original loan amount. Sometimes, you pay back two to three times more than the amount that you borrowed.
Borrowing cash loans is signing up for good, old-fashioned debt. It’s easy to get trapped in the cycle of the payday loan hamster wheel.
If you’re not careful you’ll find yourself always having to pay them—especially if you borrow money often.
They Don’t Report to the Credit Bureau
Unlike other creditors, cash advance lenders don’t report to the credit bureau. Even if you pay it back on time, it isn’t going to benefit you. The only thing it’ll do is give you a better chance of being approved the next time you apply.
The Benefits of Payday Loan
Although you should be careful when borrowing money from a lender, cash loans aren’t all bad. They can come in handy when you need them the most. These are some of the benefits:
If you’re approved for a payday loan, you’ll get the cash to you quickly. Some lenders can even get the money to you within a few hours. If you need money in a hurry, they make sure they send it as soon as possible.
No Credit Check Required
You have to provide your social security number when applying for a cash loan, but the lender might not check your credit.
Your approval is primarily based on your ability to pay the loan back. So if you have a steady income, then getting a loan is easy.
It’s an Unsecured Loan
Unlike car title loans, mortgages, or auto loans a cash advance doesn’t have any property to seize. For instance, if you finance a car or you have a mortgage, the lender can take it back. That’s not something you have to worry about from a payday loan.
However, the agency will submit your debt to collections or potentially take you to court if you default on payment.
Do You Need Fast Cash?
Listen, everybody gets in a financial bind sometimes. If you have to get a payday loan, it’s nothing to be ashamed about. But if you can avoid it, do so at all costs.
Build your credit so that you can apply for bank loans. Or set aside an emergency fund so that you’ll have your own money available if funds get tight.
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