How to Use a Pay Day Loan Responsibly
Financial hardship is not uncommon for families, especially when unemployment, health problems, or renovation projects come up unexpectedly. When families fall into these difficult times they need options. Pay day advance loans can be very beneficial but should only be taken out in times of financial distress. Here are 5 things to consider before you get stuck in a high-interest loan:
- Can you get by without it? You should only use a payday loan in case of emergency. Before you take out the loan plan what it will be used for and avoid spending borrowed money on the non-essentials.
- Don’t borrow more than you can repay. This is a basic rule to consider for any loans. Sticking to this most basic financial borrowing rule will ensure that you don’t land yourself in a situation where you are worse off than you were before simply by borrowing.
- Remember the interest. It’s difficult for some borrowers to remember to add on the accruing interest when calculating the total loan amount. If you borrow $100 with a 30% interest rate you are actually spending $30 a month to borrow $100. The genuine rule that ‘you can’t get something for nothing’ applies here as well. Some payday loan lenders may instead charge a flat borrowing fee so be sure that you know the details of your loan.
- Borrow only what you need. You can go back and add more but your loan provider won’t understand if you’ve borrowed too much. Consider the fees that you have to pay for a quick fix instead of a long term, responsible solution.
- Borrow through your credit card. Now there are a couple different types of loans under the pay day loan umbrella. You can apply for a cash advance loan through your credit card as another option with a dealer that you already have a financial relationship with.