When life happens, it can sometimes be difficult to cover those unexpected expenditures that must be paid immediately. A car repair bill, a medical expense, your cell phone has finally crapped out on you, these things can be very costly. You may not have enough to pay these bills and you have nowhere to turn.
Your friends can’t help you out, your parents can’t give it to you, and a bank loan is out of reach. But you need that cash now and borrowing it might be the only option left. You’ve seen those commercials for payday loans on your television and you’re thinking this may be the solution.
Well before you apply, take heed of these payday loan tips for ensuring that you’re not getting yourself into an even more precarious situation that could lead to a greater financial burden. Every lending arrangement, no matter the lender, must be entered into responsibly, otherwise you could be putting your credit score and your financial future at risk.
When Do You Need the Money?
A payday loan is designed to give borrowers a sum of money in a very short period of time, sometimes as fast as one day. But with this speed comes the potential for longer, more costly strings attached just for the privilege of convenience. So, before you enter into a payday loan, consider how quickly you really need the money. You may want to explore other lending options that might come with lower rates and fees but longer turnaround times.
Cash for Emergencies
Most borrowers will consider a payday loan as a last resort because they come with very high interest rates. You’re paying for the privilege of convenience and you can be sure it’ll cost you, big time. Before you decide to go with a payday loan to solve your money problems, you should consider how fast you can realistically pay the loan back.
Many payday lenders will expect the money to be repaid in a short period of time, sometimes as soon as two weeks after the loan money is distributed to the borrower. A good tip for responsible borrowing is to make sure you have the resources available to pay the loan back within that two-week period. If you are unable to do so, your lender will offer to roll the loan over so you aren’t risking a default. However, this will only add to your fees and interest, potentially putting you deeper in debt than you were previously.
So, what if you don’t have the money in another two weeks? The cycle continues and you soon owe more than you borrowed in just fees and interest alone.
Read Your Agreement
It’s up to you to know the terms and conditions of your loan agreement. No one is going to walk you through the fine print and point out the various pitfalls that could increase your debt. So read the agreement. Really read it. Know what you’re getting into first, before you commit.