Three Tips To Help Use Payday Loans Wisely

Posted on: 23 November 2015

Payday loans are despised by some, but these loans serve a purpose for many, and can be beneficial if used properly. With the current economy, many families live paycheck to paycheck, and an emergency can devastate the checking account. Payday lenders are available to help fill the gap and make sure individuals get what they need. Payday loans are easy to obtain; a client simply needs to provide proof of identity, proof of income and bank account information. Most payday loans can be obtained within just a few minutes; some lenders are even offering these services online with the help of direct deposit, so borrowers can obtain cash without leaving home. The following tips will help borrowers use payday loans wisely and not become caught in a never-ending cycle.

Emergency Use Only

Payday loans should only be used in an actual emergency. A hospital visit, car accident or breakdown or other actual emergency is good justification for obtaining a payday loan. The release of a new game for the playstation or a sale at the mall is not an emergency situation. Borrowers should identify the difference between an emergency necessity and a non-emergency want so they can make the right choice and take a payday loan only when needed.

Keep It Low

Many lenders will allow a customer to take the maximum loan amount offered. The client may opt to pay the loan back over several installments, instead of just one. This is dangerous. A client should borrow only the minimum amount that is needed and pay it back as quickly as possible to save on fees and interest. It can be tempting to borrow more to have a little extra just in case, but this can just get the borrower in over their head.

Pay It Back and Budget

Clients should also not get into the cycle of revolving payday loans. It is best to pay the loan off quickly to avoid paying more fees and interest. Then the client should make a budget that allows for money to be sent to savings to avoid another emergency situation that requires a payday loan. If there is no room in the paycheck to do this, clients should consider taking a part-time job or selling unneeded possessions online. This will allow the client to put some money in savings until everything is caught up and there is a cushion in the bank account.

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