When Is A Payday Loan A Good Idea?

When Is A Payday Loan A Good Idea?

Payday loans are sometimes thought of as a somewhat risky form of alternative funding.  While these loans can come with high interest rates, they can provide a bit of help when you need it the most.  That being said, you should never get into the habit of borrowing money on a regular basis. 

These loans should be used with caution and only when absolutely necessary.  Below are some situations where pay day loans can be quite helpful, when used properly.

When Moving:  If you find yourself faced with the task of packing everything you own and moving, you probably already feel a bit overwhelmed.  Many people just do not have the extra cash on hand to pay for moving trucks, new apartment security deposits, packing materials, and various other supplies.  Since you have to finish the process, any expense to complete your move, including interest on a pay day loan, may be well worth it to get you on your way.

For Medical Expenses:  It happens; one day you are fine and the next you find yourself in the hospital or in the dentist chair faced with mounting bills for care.  Of course you never want to gamble with your health, so a pay day loan may help to cover these unexpected expenses on short notice.  Once you have made your initial payment, do not hesitate to talk to your doctor, dentist, or the hospital to work out a regular monthly payment plan.

For Car Repairs:  This does not mean for a down payment, a monthly car loan payment, or for insurance.  These expenses should already be figured into your monthly budget.  However, if your car breaks down, and you do not have the money necessary to fix it right now, you may want to consider a pay-day loan. 

After all, if you do not have a car, you may not be able to get to work, which will drastically affect your ability to pay your regular bills.  A payday loan can relive the financial stress for the short term in order to get your exhaust system repaired, your steering fixed, or your engine replaced.

When taking out a payday loan, only take out as much as you absolutely need.  You never want to apply for more than your actual expense as this will only add to your already strained financial situation.  Always deal with a reputable payday loan lender that offers clear terms, in writing. 

Once you have received your next paycheck always return to the lender to pay off your loan immediately.  In some cases, paying early may save you a bit of interest.  Once you have repaid your loan, you should refrain from taking out another.  Some people get into the habit of borrowing money, paying it off, and quickly borrowing again. 

This can create a habit that is hard to break, will keep you in debt, and may end up costing you a great deal in the long run.  Because of this issue, many payday lenders now refuse to issue repeat loans.

Finally, never ever use a payday loan to pay off another loan, a credit card, or to pay other types of bank fees.  Payday loans are a source of emergency funding.  If you abuse the system you will find yourself in a constant state of emergency that never ends.