Taking out payday loans is such a costly choice that you shouldn’t even think about unless it’s your last resort.
Having an emergency savings account is a good way to stay away from payday loans.
But sometimes we need cash in a hurry and we’re out of options to get what we need. So in these three scenarios listed below, taking a payday loan might make sense.
1. Take out payday loans only if you have no other recourse.
Because the fee and interest from payday loans are so outrageous, do not take out these cash loans until you have at least considered alternatives such as personal loans for bad credit or a personal loan such as SoFi.
So what are Payday loans?
Payday loans (sometimes called cash loans, same day loans, or online installment loans) are high-cost short term cash advance loans.
Payday loans include small amount loans (loans of up to $2,000 that must be repaid between 16 days and 1 year) as well as loans borrowed over longer periods.
You just apply to the small amount lender and you can get the money on the same day in your bank account.
You will usually repay these cash loans by a direct debit from your bank account, or a deduction from your pay.
Your loan repayments will usually be deducted on the day you are paid, so make sure there is enough money in your account to cover this repayment and your other expenses.
Payday loans are outrageously costly. For example, a $500 payday loan can carry a fee of $100.
The only situation desperate enough to justify taking out payday loans is one where you can’t buy groceries, you can’t keep the light on.
Other than that, see if you can get qualified for a personal loan.
Alternatives to payday loans
If you need money, there may be cheaper alternatives to a small amount loan:
- Negotiate with your utility provider. if you’re having trouble paying an electricity, gas or water bill, contact your utility provider.
- Get a low interest personal loan: if you’re on a low income, you may qualify for a low interest loan to pay for essential household goods or personal services such as medical treatment.
A lower interest personal loan may be a better option than payday loans, even if you have bad credit.
2. Take out a Payday Loan Only if You Can’t Qualify for Any Other Loans
Sometimes the reality is that some people cannot get qualified for a personal loan because of their low credit store, credit history, etc. In this situation, taking out payday loans might make sense.
However, there are loan services out there that specialize in bad credit loans to help people with bad credit.
For example BadCreditLoans.com is one of the best personal loans for bad credit.
With BadCreditLoans.com, you can get a personal loan from up to $5,000.
So even if you have bad credit, a personal loan may still be a better option than a payday loan.
In conclusion, payday loans might sound like a fast cash fix, but make sure it’s the right choice for you and always check if there’s a cheaper option.
Not ready to take out a payday loan? Apply for personal loans for bad credit today.
Check out these posts if you want to make extra money:
- 3 of the Best Cash Back Sites to Boost Your Savings
- 22 Ways To Make Extra Money: Make Money Online
- How to Start a Blog That Makes Money Fast
- 15+Paid Survey Sites That Will Make You $500+/Month