Do Payday Loans Really Help?Posted on
There are many different opinions about payday loans. Some people fear them and other people love them and there are lots of opinions in between these as well. This means that if you are deciding on whether to get a payday loan yourself, it can be difficult to decide whether they will really help you or just become a big burden. It is worth finding out more about them and then thinking about your situation and whether you really need the money and if a payday loan is the right borrowing option for you.
What is a payday loan?
A payday loan is a form of short-term borrowing. You can usually borrow several hundred dollars until you next get paid. You will normally need to repay the full amount at once. The loan therefore does not last very long which can be great for those people that do not like being in debt but you will need to find a big chunk of money and then also manage for the rest of the month without that money which can sometimes be difficult. Payday loans are designed for those people that have poor credit ratings. They do not do a credit check and therefore no one needs to worry about this. They can also be arranged very quickly, sometimes within a few hours, which means that they are useful when you need money in an emergency and do not have the time to organise any other sort of loan. Because they are arranged so quickly and they do no credit check and take on more risk, they can be expensive compared to other loans.
Why do I need money?
It is worth thinking about why you want the money and whether it is worth having the loan. Consider what you are buying with the loan and whether it is really necessary for you to have that item. If it is something vital then it could be that the loan is worth it. If it is for something that you could go without, then it is likely that the loan is not worth it. It is not always that easy to know, but discussing it with someone else might help you.
If you cannot decide then find out how much the loan will cost you. This can be hard if you just look at the interest rate, so find out from the lender how much you will have to repay in full and you will then be able to work out the cost by taking away the amount that you borrowed. You can then think about whether you think that the cost of the loan is worth it.
It is also worth thinking about whether you will be able to manage the repayment. It is a lump sum and so you will need to find a big chunk of money in one go and then manage for the rest of the month without that money. You need to think whether you will be able to afford the loan and then whether you will be able to afford the rest of your financial commitments as well.
Is a payday loan the answer?
It is also worth thinking about whether a payday loan is the right answer to your financial problems. Some people find being in debt really stressful and you have to think about whether this might be the case. This could make it a poor option for you.
It might be that you have some savings that you can use instead. It can be hard to spend savings as you may want that money to fall back on or you might be planning on using it for a specific purpose but it is so much cheaper to use them rather than getting a loan. You also need to think about whether you can wait for the item and might be able to save up for them instead.
There are also other borrowing alternatives that are worth looking at. If you have a poor credit record your options will be more limited but it is still worth checking to see if there any other options and comparing the price and the terms so that you can pick the one that you think will suit you the best.
It is also worth thinking about whether you are the sort of person that will be able to budget sensibly so that you can afford the repayment and manage afterwards. If you do not do this then you could be in the situation where you will have to get out another loan so that you can manage. This can end being very expensive and so you want to avoid this if you can.
So, whether a payday loan will help you will very much depend on your circumstance. It will depend on whether you really need the money, whether you think it is worth the cost, whether you can manage the repayments and if there are any other options.