Getting a payday loan is not the best choice if you are in a bind and need money right away. In some cases, it can actually make you eligible for more affordable credit products. Here are a few things to keep in mind:
Getting a payday loan can help you qualify for more affordable credit products
Getting a payday loan is a simple process, and many borrowers fall victim to the lure of “quick and easy” money. Many borrowers fall into the trap of impulsive borrowing, and the temptation to apply for a payday loan overcomes rational decisions. Although payday loans can lead to a cycle of debt, you should consider taking out a smaller credit product first before applying for a payday loan.
If you find yourself in this situation, the best way to avoid payday loans is to build a good emergency fund, and take advantage of secured credit cards. While these cards may have higher interest rates than traditional cards, they help you build good credit by responsibly using them. This can help you qualify for better credit products in the future. It is important to plan ahead and understand the terms of a payday loan before applying for one. The Consumer Financial Protection Bureau has an excellent website that can help you understand the terms of payday loans and how to avoid them.
Getting a payday loan can reduce expenses
Before taking out a payday loan, you should consider your repayment options. Make sure the lender is regulated by the FCA. If you are not able to repay the loan within the agreed timeframe, you have the right to withdraw the agreement. In most cases, you will only pay interest on the credit amount, plus any fees and charges. This will help you avoid paying excessive interest rates on payday loans. Similarly, if you have a bad credit score, you may be able to find a free or low-cost source of credit counseling.
If you have substantial debts, you should first contact your creditors to determine whether a payment plan would be more feasible. You can negotiate with them to work out a more affordable monthly payment schedule. By doing this, you will be able to free up some of your income for other purposes. You can also ask your employer for an advance to pay off debts. This is similar to a payday loan but without interest.
Getting a payday loan can be risky
Taking out a payday loan is a risky endeavor. It is best avoided. Instead of borrowing money without a credit check, try working a second or third job before repaying the loan. Also, try cutting expenses so that you can pay it off before payday. If these options fail, consider obtaining a personal loan instead. Online lenders can provide you with funds within a day or two.
Applying for a payday loan is deceptively simple. You need a pay stub, ID, and a blank check from your checkbook. Payday loan stores often double as pawn shops, so bring these items with you. Loan amounts are generally small – $100 to $500 – and are due the following pay period. You will also have to pay a fee of $15 per hundred dollars borrowed.