Using a Payday Loan

A payday loan sounds enticing but you must weigh both the good and bad points before you consider one of these loans. Remember, they are intended for short term use only, and you must come up with the money on the very next day you are paid. They are intended as a quick solution to a temporary problem, not as a long term loan.

When to Use

Since these loans are intended as only a way of "holding over" until you get paid again, they should not be used for every day expenses. The interest on these loans is very high so use caution when considering this option.

Some of the situations where you might justify using a payday loan include:

Your car is getting ready to be repossessed

Your electric or phone is ready to be disconnected

You need life-threatening medication that can't wait for payday

A family member is ill and needs medical treatment

Car repairs that can't wait until payday

Because of the high interest on these loans, you want to use them only when dire circumstances dictate the need. Weigh the interest rate on a payday loan again the late charge on your rent or mortgage and see which one is less - guaranteed, you will find the late charge is less, and if you don't make a habit of it, one late payment occasionally isn't going to hurt your credit.

Qualifications

In most cases you must have a bank account, a driver's license, proof of residence, and a pay stub to show you are currently employed. Some of the companies offer special discounts to those who have direct deposit of their paycheck, allowing the payday loan to be repaid immediately instead of having to wait for the check and deposit to clear the bank.

Finding a Loan

What once began as a neighborhood venture has now hit the Internet as well. For the person in need of a payday loan who doesn't want to have to wait in line, there are many places on the Internet where these quick loans can be obtained, and the funds will be in your bank account within 24 hours in most cases.

You have a variety from which to choose, but you must be careful and know that the company you choose is reputable and not just taking your personal information to use in unscrupulous ways. When dealing with these companies over the Internet, be certain you are using a secure connection because you are transmitting personal and bank information; you do not want that to get into the wrong hands.

Use With Caution

Payday loans can be a lifesaver in the right situation, but be sure that you utilize them only for times when you need something that really cannot wait until payday.

Try to first work out the situation in other ways, and if that fails, the payday loan is there for your convenience. It shouldn't be a routine means of getting from one payday to the next because if you get into that habit, the high interest rates will be the cause of many financial hardships to follow.