If you’re short on cash to make the payments you need to make for the month, you may not know exactly what you should do. And if you’ve been following the news, you may have seen the Time Magazine article on increasing fees for late payments. If you don’t want to be faced with that burden, you may want to consider a payday loan or even a personal loan from a service like Wonga loans. That way you can have enough money to make it through until your next paycheck comes in.
Is a Payday Loan Right For You?
The first thing you need to ask yourself is if a payday loan is right for you. A payday loan is a short term loan that typically has a term of 30 days or less. So, if you don’t know if you’ll be able to repay the loan in under 30 days, this may not be the right type of loan for you.
Also, you need to think about the fees involved in getting the loan. The amount you repay will include the original principal borrowed, plus interest and fees. So don’t just think about repaying the principal, but look at the total cost.
Finally, you have to make sure the money is in your account prior to repayment. If you’re not sure it will be, you may want to reconsider. The penalties for not repaying the loan on time can be significant.
Other Lending Options
So if you don’t think a payday loan is right for you, you may want to consider these other options. First, you can look at peer to peer lending. Peer to peer lending is online lending where other individuals fund your loan. You typically get higher loan amounts and longer repayment terms. This can give you some flexibility to repay the loan and be current.
Another option could be to get a collateral backed loan like a pawn loan. This is where you put up something you actually own as collateral. If you don’t pay the loan back, the broker will sell the item to get their money.
I would consider a payday loan only in the debt of unimaginable deprivation and even then I’ll think long and hard about it. In other words, I hope never!
I’m with Marie! Hope I never am in circumstances where I’d have to consider it.
Payday loans are always next to liquor stores and poor neighborhoods. You don’t see payday loans next to the nice Costco or good part of town. The rates on those things are seriously criminal. I think the mafia gives better rates. I’d use a credit card long before a payday loan.
I am a big believer in having alternate plans for any situation. I set up a line of credit a long time ago when I did not need the money. Over the years, I have used it for cash flow problems, investing and other times it made sense. If you do not have a plan B, you have no choices!
I would say that in almost every situation, a payday loan is not the right answer, unless it is truly a one-time event. The problem with payday loans is that they leave the borrower without enough left over from their next paycheck to cover the next week or month’s bills, and the cycle repeats. Furthermore, the interest and fees from these loans are extremely high. You’re better off in some cases taking a cash advance from your credit card than getting a payday loan.
I like your alternative ideas better, like using a peer to peer network, although I’m guessing it’s not easy to get money this way. The key is to break the cycle by getting slightly ahead of your bills instead of always paying them from behind. The best way to do this is to cut your spending and try to find some supplemental income (blood banks, online jobs, etc).
but for me it was posibility to resolve my problem with car after accident… I think payday loan is the good idea. I like when I know where can take money…
I have used payday loans a number of times and they are absolutely fine if (a) you borrow from a credible lender and (b) if the loan you take is for a true emergency and you 100% know that you have the funds to pay it back (based on the agreement) without leaving yourself in difficulty afterwards.
Good article though!
I’m having a real hard time thinking of a situation where a pay day loan would be preferable to late fees. As Brent says, the rates are near criminal…
Payday loans have had a great deal of negative press recently, in fact yesterday it was all over the BBC radio here in the UK. However, yes they are expensive – particularly if you can’t repay in time. However, what you pay for is the convenience of getting a loan quickly when it might take days for a bank to approve a loan. I do however believe that Payday Loan companies have a duty to thoroughly check that applicants are able to repay. Sometimes they will rush through applications in order to be the ‘fastest’. However, that often results in poor vetting procedures and loans that (often desperate) people can’t afford to repay. Consider a responsible lender instead, it might mean a phone conversation and a fax, but it’s worth it to make sure you’re being looked after.
I think there is a time and a place for payday loans and as a real last resort they can definitely be of use, it just depends on your personal financial situation and making an educated choice based on that.
I think there is only one time you should consider a payday loan, and that is when you have no other options! Ok they do have some perks but really should only be used as a last option.
I advise all people to note down the terms and conditions of loans which they are applying. It is specially to avoid all future hassles and troubles in your life. Now days most of the loan companies have website. They have displayed all terms and conditions on the site. Further they always ask their applicants to go through their conditions and terms before accepting the loans from them.