When Is It a Good Idea to Take Payday Loans
Posted by : Premraj | Posted on : Thursday, August 6, 2020
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REDDITA coronavirus pandemic survey took place with 1,000 Americans. The results showed that 51% of poll participants had to dip into their savings account to make ends meet. Which makes you wonder, what happens when their savings are all gone?
If you’re worried about finances, a payday loan could be the answer. However, payday loans will only benefit you if you know when to get them, and how to find reputable lenders.
Read on to learn everything you need to know about getting a payday advance.
When to Get a Payday Loan
A payday loan shouldn’t be your go-to choice for covering your monthly expenses. Instead, payday loans work best when you’ve already explored alternative financing options.
Here’s a shortlist of everything you should apply for before getting a payday loan:
– Credit cards
– Credit union loans
– Personal loans
– Family and friends
– GoFundMe
Can you qualify to receive a credit card? If yes, you can use the card to cover your essential needs. Certain credit cards will also let you take out a cash advance.
While cash advances on credit cards do come with high fees, the interest is much lower than what you’d pay with a payday loan. Next, find out if you qualify for a credit union or personal loan from a financial institution.
If you don’t have the best credit, reach out to your family and friends. Borrowing money from loved ones can be difficult, however, it’s better than not having the things you need to survive. You can also go online, and use a GoFundMe account to help out of state family and friends contribute.
Out of Options?
Did you explore all of your alternative financing options, and you’re still in need of cash? If yes, a payday loan can be the best way to help you get the funds you so badly need. However, be careful to only take out a payday loan if you’re dealing with a real emergency.
Using Payday Loans for Emergencies
Imagine, your car breaks down and you can’t get to work. Your boss tells you that if you don’t come in this week, she’s going to let you go. What do you do?
When you’re dealing with a life emergency, there usually isn’t time to explore a ton of financing options. Luckily, a payday loan is perfect for helping you get fast cash, so worse things like losing your job, don’t have to happen.
You can also find payday loans for unemployed on benefits if you’re currently receiving unemployment. Ask yourself, what will happen if I don’t get this money right away?
If the answer is worse than the high fees you’ll owe for the loan, go ahead and get a payday loan. However, make sure you first have some type of plan to pay the loan back.
Know Your Borrowing Limits
The state you live in plays a big role as to how much money you can borrow for a payday loan. For instance, while 1 state will let you borrow up to $1,000 another state may set the cap amount as low as $200.
Before you go to a payday loan location, call ahead to find out what their borrowing limits are. You can also do a quick online search to see the borrowing limits for your state.
If the lender can’t give you enough funds to cover your emergency then a payday loan will just be a waste of your time and money. However, if your state allows for high borrowing limits, the next step is to find a reputable payday loan company.
Trust Your Lender
When you trust the lender, a payday loan becomes an even more appealing option. To find a quality company, you’ll first need to review the lender’s advertising practices.
Do they clearly state the interest rates and repayment requirements? Is the lender willing to disclose any limitations that relate to the loan?
You should only get a payday loan when you’re able to fully understand the terms of the loan. If the lender isn’t willing to disclose every detail about the loan, or you have to hunt to find the interest rates, keep searching for a better company.
Look for Ties to Large Institutions
Try to stay away from small payday loan companies that don’t’ have any ties to larger financial institutions. When a lender has ties to a large financial institution, it gives them more credibility.
You can rest at ease knowing the payday loan company won’t try to trick or swindle you in any way. Instead, a credible company will follow the best lending practices. You’ll also find that the better the lending company, the better the customer service is.
Check the Lender License
Every payday lender should have a lender’s license for the state they’re practicing in. The license lets you know that either federal or state regulators have examined the lender.
The licenses are also a clear indicator that the lender adheres to the proper business practices. Before you take out a payday loan, ask the lender for their license number. Next, contact your stat’s Attorney General to see if the license number has a clear history.
Finally, be wary of payday lenders who try offering you incentives. For instance, does the lender promise to give you the easiest borrowing terms or a limited credit check? While these incentives may sound appealing, they often point to less than trustworthy business practices.
However, if every other aspect of the lender’s business checks out, incentives aren’t necessarily a bad thing. If the incentives work out in your favor, and you trust the lender, feel free to move forward!
Get the Cash You Need
Now you know that emergencies are the best time to get payday loans. After finding a reputable lender, you can finally get access to the cash you need. For more ways to get the things you need, read another one of our articles.
