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Make your money stretch out that bit more with a payday loan

Introduction.

In simple terms a payday loan is a short-term loan of just a few hundred dollars, usually between $250 and $750, and is available to anyone with a current employment history. Furthermore, payday loans are one of the many unsecured personal loans that you can access and are quite often made available for you to draw on the very next day.

Why might I need a payday loan?

Tires like these need replacing - if you're short of cash try a payday loan

Today, even for people with a job, living in these economically depressed times can be tough. You may well have a job that’s just paying enough - providing nothing unexpected happens, as you certainly haven’t any spare cash to build up some savings. So, what can you do if you need your car to get to work, but the car needs a new set of tires, or the freezer breaks down or an unexpected medical bill occurs? Well, depending on how much this unexpected bill is for you could take out a regular unsecured personal loan. That’s OK if you need to borrow say more that $500, as you’ll need to be able to pay it back over a few months. But what if you only needed to borrow say $300 for a new freezer or for those tires? You don’t want to have to pay loads and loads on interest over 6 or 12 months or more - providing you can pay it back in full from your next pay-check. This is when a payday loan could be the answer for you.

How does a payday loan work?

You can apply for a payday loan online - and get the money transferred to you for the next day.

Different companies that offer payday loans may well have variations on the following outline, so do read their conditions for making you a loan carefully. However, generally speaking payday loans will work something like this. The first thing of course is to find a finance company or bank that’s offering payday loans. You can do this really easily and quickly by searching on the internet. Having found a payday loans company through the internet they’ll invariably have an online application form for you to fill in. Apart from wanting to know your personal details you will have to add your employment details and your bank checking account. These are required for two purposes. First the company that will make the payday loan has to satisfy itself that you have a job. Secondly, they will transfer the money straight into your bank account, so that you can draw on it the next day. In agreeing to the loan you will agree to pay them interest on the amount you borrow. So, from your next paycheck you will have to repay the amount you borrowed and the interest immediately, the same day that you get paid.

Repaying a payday loan.

You must be very clear on this point that a payday loan is a very short-term one until you get your next paycheck. Payday loans often have quite high rates of interest and so it is in your own best ‘interest’ to repay it in full - from your very next paycheck. Failure to do so will cost you a lot of money in interest repayments, something you really should avoid! Be aware that many internet payday loan companies will automatically debit your bank checking account for the sum that they are owed on the day of your paycheck. You might not like this idea - but in actual fact it could save you money in the long run. Say you’ve had a payday loan for $300, it has a 20% interest rate if repaid immediately from your next paycheck; that’s $360 in all. Pay it off first time and in one go it’s done and over. Say you only pay off $200 instead; don’t think you then owe $160, as you’ll find at least another interest charge of 20% on that, making the new debt at least - $192 etc. Payday loans are fine - providing you do repay it in full from the next paycheck. By having the payday loan company automatically reclaiming the full amount from your bank account, could actually save you from paying unnecessary interest by thinking you’ll extend the loan instead.

Hang on - payday loans have a bad reputation don’t they?

It's all too easy to get ensnared in credit card debt - but no one will warn you about that.

Yes, it’s true that payday loans are often portrayed as only being offered by crooks and criminals and only the most socially and economically deprived people use them. The problem with the way that payday loans are portrayed by the media and TV - is it’s by people who are wealthy enough to never need a loan, let alone a payday loan! As mentioned earlier, with the economy the way it is, many hard working men and women struggle to make their monthly or weekly wages cover everything, especially when a small emergency arises. Providing you are confident that you can repay the payday loan in full plus interest from your next paycheck - then a payday loan doesn’t have to be more expensive than using some credit cards! You know, every time you use your credit card you are taking out a small unsecured loan - but no one keeps warning you about the amount of interest you’ll end up paying if you don’t pay all the money back immediately the credit card bill arrives - will they!

If you see any loan sharks offering payday loans - run!

But what about loan sharks?

It might well be that you know someone who’s always willing to lend other people money as payday loans, who then say “don’t worry about the interest - we’ll work that out later”. That is a loan shark and if one ever offers to lend you money - run! This is where using an online payday loan company will work to your advantage. All the terms and conditions will be there for you to read. The interest you pay will be made very clear and by automatically crediting and debiting your bank account - they’re not encouraging you to carry on spending a fortune in interest.

Final comments on payday loans.

Remember, payday loans are for small amounts and for a very short period of time until you next get paid. Then repay the loan amount in full plus the interest. Before taking out a payday loan do a calculation as to how much you can realistically afford to repay. For example, say you earn $2000 a month and know that all the essentials you need, utilities, rent food etc, total $1500 - giving you possibly $500 spare. Then a $300 payday loan would be fine; but a $500 wouldn’t be! Why not? Well you must remember to add on the interest. A $300 loan could mean a repayment of $360, but on a similar rate of interest a $500 loan would mean a $600 repayment!

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