Having enough money is never enough. It doesn't matter how much you need, you will always feel the need for more. And, sometime we need them urgently - for needed repairs, home rents, medical bills, or to invest in a business, and the list goes on. But unfortunately, money goes faster than payday to payday. So how do you get by that need for cash before your payday arrives? One option would be getting a payday loan. But it's entirely essential to consider and understand the pros and cons before settling for this option.
Why Payday Loans
Call it paycheck loan or cash advance loan, or pretty much whatever you like to call it, but payday loans are simply short-term loans payable on your next pay day. These loans are highly preferred due to these reasons:
Quick cash - once approved, money will be transferred within 24 -48 hours.
No credit history needed - Most lenders won't mind if you have no or bad credit history.
Hassle-free Application - the money will be transferred with no questions asked. Online loan lenders even give you the option to apply for a loan without your presence needed.
What's the Catch?
Though they may be the fastest and most convenient way to get cash at an instant, mishandling and unwise use of this option will lead to more financial traps than you are currently having. Here are a few of them most common (and worst) mistakes people make:
Mistake 1: Not sure about your ability to repay.
These types of loans normally carry very high interest rates. These amount can and will accumulate into a large sum within a few months, so it is only logical and wise to take out a loan or amount that you are sure you can repay - including its interest.
Mistake 2: Getting a loan to pay another loan.
AVOID getting a loan to for the purposes of repaying another loan. As far as statistics is concerned, people usually are unable to settle and pay the amount at the end of the loan period. Thus, some people take out a loan from a lender, just to pay another. This will lead to a seemingly never ending debt trap, where the interest makes the borrower unable to repay the whole interest and the loan itself. This is the very reason that usually leads to bankruptcy.
Mistake 3: Not Doing Research
Most borrowers usually get distracted and focus only getting the money, and forget the details (laws, interests, other fees, etc.) related to payday loans. For instance, some state laws limit the amount of allowable interest rate at a certain amount for any type of loan. Moreover, a lot of the borrowers won't even bother comparing the interest rates of different lenders to somehow get the best offers. Resulting to them not getting the best options, leading to them getting higher payments, more hidden fees, or longer processing. It is highly important to do thorough research on these loans including its pros and cons. Look for alternatives such as pawning for cash loans or car title loans, or speak to your former borrowers, relatives, friends, etc for references and feedback.
To conclude, payday loans are great options for your fast cash needs given that you can and intend to repay the loaned amount plus interest.