We’ve all had an emergency and need a quick loan to get us out of the bind. This is why payday loans are so convenient. They don’t require approval from the bank, your credit score, or anything else like that! Not to mention they generally have much lower interest rates than traditional loans. Since these loans offer so much convenience, it’s easy to be taken advantage of by predatory lenders. Here are some things to remember before applying for one of these loans.
For most people, a payday loan isn’t appropriate as an emergency unsecured loan because many alternatives are available. Improperly secured loans can have devastating outcomes when you don’t manage them properly. Even if that isn’t the case, at least make sure you use a reputable lender who won’t charge excessive fees or try to take more out than they agreed upon. Use a credit card for the charge for anything that requires a quick turnaround, like an unexpected bill or car repair. Paying off a $2000 repair on a credit card with an interest rate of 19.99% would cost you around $200, but the same charge on a payday loan could wind up costing you more than $500 in fees.
You must pay the entire loan before your next paycheck to avoid excessive penalty fees. This is risky for anyone who can’t afford to pay the balance off before their next paycheck. If you receive a new job that pays you more than the amount that was previously agreed upon, or your tax return suddenly pays you a raise of $200 or more, think about committing to paying the loan