Payday loans: To be or not to be
So, today we are going to talk about such a financial tool as payday loans. I know that some of you are terribly afraid of them. I also know that some of you actively use them and some of you even suffer from them. And each of you is right and wrong at the same time. Because nothing in the whole world can be absolutely good or absolutely bad. That’s not how it works. It’s just that everything has to be treated with intelligence and caution. Okay, let’s go in order.
Payday loan: What is it?
As we all know, a payday loan is a small amount of money that you borrow from a lender for a short period of time. The half is usually 14 days – after that, you have to finish the game by repaying the debt. For such a loan, you don’t need collateral or a perfect credit history – the main thing is to have a stable source of income.
At first glance, everything is simple, isn’t it?
What problems may be waiting for you
It would seem that everything is very simple with payday loans. You borrow a small amount, use it, and pay it back. What could be simpler? But there are several pitfalls. First of all, interest rates. It all very much depends on the lender, first and foremost. In California, by law, the amount can’t exceed 15%, but that can still be a little costly.
The hardest part when it comes to payday loans is figuring out your budget correctly. You need to be one hundred percent sure that you will be able to repay this amount on the required date. After all, a payday loan cannot be paid in installments or stretched over several months. Of course, you can agree with the lender to refinance, but it will cost you even more.
Why people are afraid of payday loans
All fears come from the inability to calculate their financial possibilities. Let’s say your car broke down and you urgently need to fix it. Payday loans are the fastest way to borrow money. No other loan can compare to their speed, unless you go to a pawn shop, but there you will need collateral. So, you borrow money because you need it now, but you don’t evaluate your options. When you get your paycheck, will you be able to cover this loan? Also so that you still have money left over to buy food, gasoline for your repaired car, and tickets to the baseball game. If you don’t, your case is bad. The most successful option is to borrow from one of your friends, but close the loan. Or take out a personal loan, for example, which often has lower interest rates and, most importantly, can be paid back gradually. Nevertheless, you will pay one way or another for quick access to money.
So is it worth taking out a payday loan or not?
There is no definite answer to this question. Certainly, it is better than any loan to have personal savings for emergencies. But I will not judge people who do not have such savings. Nevertheless, if you need money urgently – a payday loan is an acceptable way to get it. It’s really fast and doesn’t require extra documents, you can even borrow money using an app on your phone! Nevertheless, you should be clearly sure that when the judge blows the whistle – you will be ready to return to the lender the full amount with interest. If you don’t have that confidence, consider other options. A credit card, for example, will be just as quick, especially if you don’t charge it, but just pay it off. A personal loan will cost you the least, but will of course take a little more time. Always, do you hear me? Always assess your risks and check your cleats before you take the field.
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