Borrowing from online payday loan lenders is easier now than ever before, but that doesn’t mean you shouldn’t take some time to consider whether you should be taking out a payday loan first. Even though the loan is typically for a small amount, it could be big trouble for your finances.
A payday loan is intended for an emergency situation in which you need money fast and can pay it back in a short time, typically two weeks or less. It is meant to help you survive financially until your next payday.
When you are considering borrowing from payday loan lenders, don’t do it just because it is convenient and easy. Do it because it is the right thing to do for you financially. It needs to make sense.
First of all, you need to look at available alternatives. If you have enough room on your credit card, you shouldn’t get a payday loan because if you pay off the amount you borrow when it shows up on the statement for your credit card, you won’t be charged any interest for it.
Also, if you can wait for money from a more traditional loan, you should do that as well because the interest rate will be much less. Consider borrowing from friends or family as well. This may be a humbling experience, but it is unlikely they will charge as much as a payday lender will.
If you’re not sure if you need the payday loan, then consider the total cost of the loan. This will usually be somewhere between $15 and $30 per $100 that you borrow. If those fees add up to less than what it would cost you in late fees or overdraft fees that you would accrue if you didn’t take out a payday loan, then it would be a good idea for you to borrow from payday loan lenders. But this is only if you pay the entire loan off in two weeks.
Think carefully about how you will pay back payday loan lenders
This is where you need to do some careful thinking. You need to have a plan on how you will pay it off. This is because when your paycheck arrives, you can use it to pay off the loan, but you are two weeks closer to having to pay other bills. Do you have that much extra in your paycheck?
Before you take out that loan, you need to know you can pay it off. If you don’t have enough in your normal paycheck, then you need to do one of two things: increase your income or reduce your expenses.
For such a short term, it wouldn’t make sense to get a part-time job (unless you wanted to ensure you won’t have to go this route again), so you probably will need to cut back on expenses. Have a plan in place to avoid any other extra expenses, like buying new clothes or appliances, or going out to eat at a restaurant.
Plan on sticking to the basics for a couple weeks until you get that loan paid off. Otherwise, you could be forced to renew the loan, which would double the cost of borrowing from payday loan lenders.