Let’s face it: if we’re looking at taking out payday loans, things are going very badly for us already. Assuming that we don’t have some crazy fetish for throwing money away, we would only consider a payday loan if we have already exhausted other means of obtaining credit. Before it gets to that point, our credit has likely been thoroughly trashed.
Payday loans are amongst the most expensive ways of obtaining money. If APR (annual percentage rates) were advertised as they are on bank loans, the signs in the widows of cash advance places would read something like this: GET CASH TODAY, LOW 200% APR. Of course, you’re never going to see that advertised in the payday loans store windows.
What you will see advertised are the benefits of a payday loan. Basically, here they are: You can get a loan now, and you can get a loan even if your credit is terrible. As a matter of fact, most places won’t even check your credit. The loans are for relatively small amounts, and the lenders are willing to take the risk that you will pay them back. In return, you get to pay the high interest rates.
That being said, there are some legitimate reasons to use payday loans. If you’ve exhausted other sources of credit, and have a legitimate need for cash in hand, right away, a payday loan may be your only option. Basically anyone with a job and a checking account can get a payday loan.
The main thing you want to remember when taking out your loan is that you are going to have to pay this back, on payday, at a high rate of interest. You will typically pay back $10 to $15 for every $100 you borrow, in addition to the money you borrowed itself. So, before you take out the loan, make sure that you really need it.
Needs that qualify as a relatively good reason for taking out a payday cash advance should meet two criteria:
- First, they should be genuinely important. With the interest you’ll be paying, that almost should go without saying.
- Secondly, the need should be urgent. Basically, if the need is truly important, ask yourself, “Is it really true that this can’t wait until I get paid?”