Although there is a somewhat poor stigma associated with payday loans right now, they can actually be a great option when you are facing a big problem and need some quick cash. If you think you may have a problem with paying back these loans on time then you should stay away!
Payday loans are meant to be short term solutions.
The important thing in order to make sure that your payday loan is the rate and term – which varies by lender. You do not want to be paying off a $500 loan for the rest of your life, so make sure you take a look at the terms and conditions before you sign anything.
There are many payday lenders that could provide you with a decent rate of interest taking into consideration the circumstances, nevertheless, you cannot expect to get the type of rate you can get in a good credit personal loan situation. Since payday loans require little documentation and accept pretty much any type of credit. You can think of these loans as short term bad credit loans.
There are also many payday lenders now offering longer terms for repayment instead of the traditional 2 weeks.
Although the rates for these loans can be manageable at first, you need to remember that the rates will skyrocket if you miss a payment. Spending $550 later to get $500 right now may not seem like a bad deal at first, but that deal can go sour rather quickly if you miss the first payment. You will be forced to pay more interest when you miss that first payment, and you will also sometimes be forced into paying extra late fees. When people talk about the dangers associated with these kinds of loans, they are really talking about what can happen if you fall behind on your payment schedule.
The good thing about the payday option is that you do not have to tell the lender what the money is going to be used for when you borrow it.
The lender does not care what the money is going to be used for, as long as you are able to pay it back on time with interest. Some people take out these loans to pay for vacations, electronics or a number of different items.
A word of advice on using payday loans
But remember. These loans are short term with a considerably higher interest rate than a regular personal loan. You should take these loans out for emergencies like you need to make repairs to your car or pay a hospital bill. Using a payday loan to finance a vacation is something I don’t recommend. You should SAVE for a vacation so you can truly enjoy it knowing that you won’t have a large bill coming due when you get back!
Although payday loans will usually turn out to be a viable option for some people, you should think about asking your family or friends for money first. It can be rather embarrassing to ask the people you love for money, which is why some people decide to stick with online lending options.