If you find yourself short on cash but have needs to meet, a payday loan could be a viable option. Like with any type of loan, you’ll want to be careful. You must read the fine print, ask your loan officer questions, and really take the decision seriously. If you are unable to repay the debt, like with other types of loans, the costs can escalate through interest and late-payment fees. Before you dive into a payday loan, here is all you need to know.
How Payday Loans Work
First, let us explain how a payday loan works at its core. The loan is designed to let individuals receive a cash advance against their upcoming paycheck. Typically, the loan itself is quite small, and the repayment term is short and qualification requirements are simple. It’s an attractive choice when you need quick cash before your next paycheck.
The amount you borrow completely depends on a number of factors. Most payday loans are relatively small, at around $500 on average. Then, you have the associated fees. These are regulated by law, which means the lender will only charge between $15 to $30 for every $100 borrowed. The money, once you’re approved, is delivered to your bank account quickly.
Why You Want a Payday Loan
There are numerous situations in which a payday loan can be helpful. Even consumer debt experts realize their benefits at times. For instance, if you require cash for a short period, such as to buy groceries or to pay the rent on time, then it’s something to consider.
Remember, a payday loan is not a crutch. You cannot take out multiple loans and expect to live off the proceeds. The interest and fees will eventually bury you in debt.