How to Responsibly Use Payday Loans
When you need cash fast because of an unexpected expense, payday loans are something to consider. Because the application process is quicker and simpler than a traditional loan, oftentimes this is the best option when you need money immediately. If you’re considering applying for a payday loan, it’s important to borrow from a reputable lender and carefully read the terms and finance charges associated with the loan. To make sure your payday loan works for you and doesn’t get you further into debt, follow these guidelines for responsible use of a payday loan.
Do Your Homework
Carefully research lenders you are considering and ensure they have a good reputation. The Better Business Bureau is a good place to start, then check out any reviews posted online. A simple Google search of the company’s name should bring up a list of information about them. When you find a lender who has a good standing, look into the types of loans they offer and decide which ones work best for you. Read the terms and conditions of the loan you are considering, and be sure you know the interest fees and finance charges associated with the loan and when it is due to be paid back. This way you will be well informed and won’t be faced with unforeseen surprises.
Payday Loans Should Be Used Only for Emergencies
When you truly have an emergency and need money right away, payday loans can be very beneficial. It’s not recommended to take out a payday loan if payment can wait until you receive your next paycheck, or if it’s not something that is absolutely necessary to pay for immediately. Payday loans have shorter repayment periods and higher interest rates than traditional loans, so if the purchase or payment can wait until you are financially able to pay, that may be the best course. However, when you experience true emergencies, like a crucial car repair or a co-pay for an urgent health issue, payday loans can be a saving grace.
Read the Fine Print
When you’re faced with a true emergency and need money right away, it may be tempting to skip reading the terms and conditions of the loan, but doing so may mean incurring unexpected charges or missing important repayment deadlines. It may take a little more time, but arming yourself with all the information before signing on the dotted line can help you make responsible and informed borrowing decisions.
Borrow Only What You Need
Your payday lender may offer you a greater loan amount than what you really need. It may be tempting to borrow the maximum amount, but this isn’t advisable. Borrowing more than you need means your loan will accrue more interest, and you’ll be paying back a higher amount when the loan is due for repayment. It’s wise to borrow only the amount you need to handle the emergency at hand, that way you’re not putting yourself in deeper debt.
Borrow From Just One Lender
Going to several different lenders at the same time to borrow money isn’t a good idea. You’ll wind up in debt for more money than you can reasonably pay back. Stick to just one lender to avoid getting over your head in debt.
Pay Back the Loan Promptly
Making sure you prioritize paying back your payday loan in full and on time will help keep your credit in good standing and is a good way to stay on top of your debt. Borrowers who fall behind on payments are subject to additional fees and interest, and are therefore digging a deeper hole for themselves. Make repayment of your loan a priority.