Essential Questions About Payday Loans

An increasing number of people are using payday loans. These cash advances are taken out by people in need of any emergency cash crouch like a medical condition or a car repair. As long as you qualify for the loan, you can have the amount you need in your bank account within 24 hours.

Just in the past few month, the number of people looking for loans in US has increased by more than 166% ! This shows a clear and urgent need for these loans. However, as these loans carry a high rate of interest, they should be taken out only in need of emergency and should be seen as the last report. According to financial experts, these loans should not be taken lightly as they are the most expensive kind of borrowing today. But they do play an important role of helping out people in time of financial emergencies. But one needs to pause and take a look at his spending habits if he or she is taking out those loans more than 3 times a year. This is a sign that something is not right with your finances and expenses. Here are some important questions to ask yourself before taking out one.

Can I avoid taking out the payday loan?

Ask yourself if you can avoid taking out the loan and can do without it till your next paycheck arrives. These loans should not be used for casual purchases. For example, if your phone bill is much bigger this month, it is better to default on the debt, rather than pay those exorbitant charges on the payday loan. Reset temptations of buying that latest gadget or that funky designer dress. Payday loan is meant for only emergencies.

Can I look at other options?

Before filling out an application for the payday loans, look at other options from where you can borrow the money at zero interest. Your family or friends are good options to begin with. You can even ask your boss for an advance. It may be embarrassing to ask but there is no harm in asking.

Can I repay it the next month?

Take out the loan only if you are 100% sure of repaying it back the very next month when your paycheck arrives. Many borrowers are not able to repay and get caught in the vicious cycle of debt.

Can I afford them?

As a borrower, it is essential for you to know that payday loans are the most expensive form of borrowing. The annual percentage rate or APR is simply huge. One payday loans, you might pay like 1300% as compared to normal credit card where you pay 16% on your borrowing. Therefore, keep the whole picture in mind and see if you can really afford them.

Can I get them inspite of my poor credit report?

This is perhaps one of the main reason why so many people are able to qualify for the loans as there is no credit check done. Even people with a bad credit short can get the payday loans as long as they have a stable job. Nobody is going to look into your past credit history.

The bottom line is that use the paydays loans wisely and take them out when you absolutely need them and have no other means of getting the money.

 

This was brought to you by FastLoanTree.

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Category: Loans