Payday loans are widely advertised types of loans that are often characterised by high interest rates. Payday loans can become costly for your credit if you fail to keep up repayments, so we have summarised what your main considerations should be when deciding whether or not a payday loan is right for you.
Are You Borrowing Money For The Right Reasons?
Payday loans are intended as a short-term solution for unexpected expenses. Due to the amount of interest that accrues, payday loans should not be used as a long-term payment strategy.
Reasons that are generally thought of as acceptable for getting a payday loan include: unexpected medical bills, vehicle repairs, funeral costs, and other short-term emergency bills. Payday loans are intended as short-term solutions for emergency unexpected payments, so should not be used for unnecessary or trivial purchases such as shopping sprees or cosmetic surgery.
Use payday loans for unexpected emergency expenses, not frivolous spending. It also goes without saying that you should not borrow a payday loan to pay off any outstanding loans as this could lead to a vicious cycle of debt.
Have You Looked at Alternative Options?
Payday loans are not the only way to make up money fast. Before applying for a payday loan, you could consider borrowing money from your friends and family, seeing if your workplace has any schemes in place for short term loans, and selling your unwanted items. Other options include looking into an authorized overdraft from your bank or applying for a low interest credit card.
If none of these options are right for you, then a payday loan might be best for you.
How Much Money Do You Need For the Actual Expense?
Payday loans should only be used for unexpected bills or emergencies, so you should only borrow the actual amount you need. If a bill is $800, only borrow $800 from a payday lender as opposed to $1000.
Sure, a little extra money would be nice, but that is not what payday loans are intended for. Make sure you only borrow what you need, no more.
Can You Afford the Payday Loan Repayments?
Payday loans are characterised by very high interest rates. If you are unable to make repayments, the interest will continue to accrue on your loan. This can result in very high costs for borrowing money.
Only ever take out a payday loan if you are certain you will be able to make the scheduled repayments. If you can comfortably say that you are applying for a payday loan for the right reasons, you have looked at alternative options, you can afford the repayments, and you are only taking the amount you need rather than want, then a payday loan might suit your needs. You then need to consider the logistics of applying for a payday loan.
Am I Eligible For a Payday Loan?
To be eligible for a payday loan, you need to:
- Be a US resident
- Be at least 18 years of age
- Have a consistent income of, as a minimum, $800 per month
- Have a checking account that your payday lender can deposit the payday loan into.
It is important to remember that being eligible for a payday loan does not mean you should take one out. Remember to ask yourself if you are borrowing for the right reasons, if you have considered your other options, if you are able to make the repayments, and if you are only borrowing what you need.
Can I Get a Payday Loan With Bad Credit?
Even with a bad credit score, you can still find a payday loan to help see you through your unexpected emergency expenses. Dollar Hand is a lending site that allows you to find the best place to borrow money from a handful of personally reviewed and approved payday lenders and short-term loans companies in the US.
With all credit types considered, Dollar Hand can help you find the emergency money you need. They are open to all applicants and want to help you find a lender that will approve you.
If you have decided that an online payday loan is right for you, Dollar Hand can help you get the funds you are looking for. All you need to do is choose the amount you are looking to borrow from $100 to $35,000, and we will do the rest!
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Daniel Tannenbaum has worked in the payday loan and consumer credit space for over 15 years across the USA. His posts share useful insights into the financial world, money advice and opinions.