When To Use a Payday Loan


It seems quite easy to consider just going to the easy loan down the street and borrowing money until payday, but is it wise? You have to consider how much you are going to have to pay back on payday. This loan cannot be paid in installments.

Consider Options

Before you decide to take advantage of a payday loan, consider the options. After all, one payday loan center that was used by a friend charged $500 for a $400 loan. The facts need to be weighed, and other alternatives considered first. Some of the reasons that might justify a payday loan include the following:

Utilities are in danger of being disconnected or turned off

Car is in danger of repossession

Creditor is threatening legal action if not paid immediately and won't wait

Emergency repairs to house or car and no other means of funding exists

Food or gasoline is needed until payday, and there is no one from whom to borrow the money

The use of this type loan must be discriminatory because of its high cost. It should not be used to save a $30 late charge on a bill because it will cost much more than that to borrow the money. Utilize good financial planning, and if it's something that can wait until payday, then let it wait.

Qualifications

Most payday loan offices require the borrower to have a home phone, recent pay stub, a checking account, and proof of residence. You must keep in mind this loan cannot be paid back in payments. When you borrow the money, you give them a check dated for your next payday. When that date arrives, unless you call to advise them there is a problem with your paycheck or bank, the check will be deposited. In the event that the check does not clear the bank, you will be held liable and possibly prosecuted for passing a worthless check.

What if you can't pay the money back?

Depending on the payday loan company, a few will agree to extend it to the next payday, but you have to be sure to contact them before the deposit the check, and you must have a very good reason. In the event that the place you went doesn't grant extensions, the only alternative you have is to borrow the money from a friend or relative or go to another payday loan place and start the process again. The problem with this is that you're paying more high interest for the same money you borrowed in the beginning, thus another good reason for only using payday loans when you have something that absolutely cannot wait until payday.

Proceed with caution

Before taking a payday loan, be very certain that you have no other alternative to obtaining the money and that the reason you are borrowing it cannot wait. If you think there may be a problem paying it back the next payday, ask about the possibility of waiting or paying half back in two pays before you even accept the money. After all, you do not want to be prosecuted for passing a worthless check.

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