Choosing Financial Freedom

Are Payday Loans Right For Me?

27 August 2014

Aubree Mccoy

The need for emergency cash to handle moderate expenses that arise can lead to frustration. Banks may not want to lend small amounts of money, or may take weeks to process the loan. Small loan lenders may require a great deal of listed collateral, often several times higher in value than the loan itself. One way to overcome the frustration of acquiring emergency funds quickly is to work with a payday loan lender. Read on to learn more about payday loan lending and whether or not it is right for you.

What are Payday Loans?

The term payday loan is an umbrella term. It is used to categorize the concept of extremely short term micro-lending. Most of the time this type of loan is used as a stop-gap measure. The loan lender lends a small amount of money to the borrower until their next pay period. Some variations of this concept allow for several payments over a short time period, such as three months. Essentially, it is the loan lending version of a famous saying often spoken by the character Wimpy from the classic cartoon, Popeye the Sailor. "I'll gladly pay you Tuesday for a hamburger today."

How Do I Acquire a Payday Loan?

The requirements for a payday loan will vary greatly from one lender to the next. In most cases, the primary requirements are that you have proof of stable employment and a bank account. Some loan lenders may require that you earn a minimum amount of money each month regardless of how much you borrow.  

Loan lenders that you visit in person may pay you in cash or give you a check to cash at their local bank. Online lenders typically require that you accept funds and pay out funds via direct deposit and withdrawal. 

Are Payday Loans Right for Me?

This question is easiest to answer by first asking yourself a question. "Why do I need money, now?" The answer is important because it is the easiest way to determine if a payday loan or some other loan option is right for you. If you need money immediately with few to no hassles, and you do not have a credit card that can meet your needs, a payday loan may be your best option. However, if you do not have a need for money to deal with a true emergency a payday loan may not be right for you.

A few reasons that you may consider a payday loan to be a great solution to your borrowing needs are:

• sudden car repair costs.
• renting a motel room because of a mandated evacuation event. This is typically due to inclement weather, such as an oncoming hurricane, or a home damaged in a fire.
• emergency travel costs, such as a plane ticket.

There are other reasons to consider a payday loan for short term needs. You may have a chance to go with friends on vacation. Perhaps you are invited to a friend's out of state wedding. You may even find that the perfect apartment or house for your living needs has come up for rent, but you are a little short of having enough money for the initial payments.

The reasons are many and varied, but it is important to remember that these loans are short term. You will find that they can be a saving grace in times of need, but due to high fees and interest they can be detrimental in day-to-day expense management. The average APR of a payday loan is 426%. A $100 payday loan may require a interest and fee payment of $17.50 on average.

This means that a payday loan is a more expensive long term loan choice. However, if you do pay it off within the original time frame the total cost can be offset with the rapid nature of acquiring the funds. If you need money today, consider contacting a payday loan lender to learn more at http://www.getezmoney.com.

Share