subject: What You Should Know Before Getting a Payday Loan [print this page] What You Should Know Before Getting a Payday Loan
Most people know what a payday loan is, but in case you do not it is a short-term loan based on your earnings. For example, if you earn $500 each week, the company allows you to borrow against that and then you pay it back on your next payday. These types of loans carry a very high interest rate and do not require any credit checks. Therefore, your job is your credit, in the case of a payday loan. Payday loans are very common and most of the companies operate online businesses, so you can apply online and then fax proof of your income, such as your last few pay stubs or bank statements.
Most financial advisors balk at the entire payday loan industry, but there are times when a payday loan is a best option scenario. If there is a true emergency, and the individual has no one to turn to for help, a payday loan is often the answer. Additionally, many people only get paid every two weeks or once per month. If an unexpected emergency arises, a short-term loan is often the answer.
Emergencies happen, that is simply a part of life. You come home from work and find your dog very sick, you do not get paid for two weeks and do not have additional money to take the dog to the veterinarian. Obviously, this is an emergency scenario, and one that cannot wait because the dog's life may depend on it.
One benefit to the payday loan companies is they know that when people apply they need the money as soon as possible. This is why many times you can have your money directly deposited into your bank account the next business day. Therefore, in the scenario of finding your dog ill a quick loan could mean you can take it to the veterinarian the next morning.
Another emergency includes car trouble, especially if it is your only means of transportation to get to and from work. If your car breaks down and you do not get paid for a week or two, you have a true emergency on your hands, and a payday loan can mean the difference between going to work or not. Having the money in your account the next business day can allow you to have your automobile fixed so that you can get to work.
A true emergency requires quick cash and a payday loan can be an excellent alternative if you simply do not have the needed funds. The problem many people get into with payday loans is they take out more than one loan at various companies. This is a disaster waiting to happen because a person borrows one loan to pay off one of the previous loans, and then has to take out another loan to pay the new loan. The process is unending and very tiring, not to mention very expensive since the interest is very high and you will pay a specified amount per every $100 you borrow. Therefore, if you borrow $500, your payback could be as high as $580 dollars. The key is responsible borrowing and only borrow what you need, not what you qualify for. This saves you money and you know you can pay it back.
