While statistics show that we are pulling out of the ongoing recession, many families still feel the financial squeeze of being unemployed, underemployed or bad budgeting habits -let’s be honest! Enter payday loans. These are instant loans anyone with a job and decent credit can get in as little as 12-24 hours and they’ve become more common than we realize in today’s society. Often, they are demonized by those who haven’t been in a situation where they need money immediately and abused by those who do.
There are a few questions you should ask yourself before taking out a payday loan. We have listed them here to ensure you do not get into adverse credit difficulty if and when you decide to use one. Of course, even the most trustworthy payday loan website state they offer ‘this that and the other’ but by following this list you will be well served to make a correct judgement call.
- Do I really need this loan? Will I die, go to jail, end up in the hospital or starve if I don’t get it? No, seriously.
- What can I do to earn the money I need in a short period of time?
- How did I get here? What steps did I take to put myself in the position where I need a loan that will cost hundred more than what I am borrowing? What will and can I do to avoid being here again?
- What are my alternatives? We’ll discuss this below.
Let’s be clear. Payday loans are evil. The goal is to get you wrapped up in a mountain of debt with no real way out. So you’ve gotta over-stand the points made here. Payday loans are an absolute last resort. Don’t allow your anxiety to drive an irrational need. You’ll be better off on the long run if you assess your situation using the questions above before you launch into several applications for a payday loan.
Check out the following chart as an example of what you’ll pay from an actual payday loan company:
Getting the loan is easy. Paying it back will cost you dearly. The hope is that you’ll renew (if they allow that) which only increases the amount that you owe by an astronomical number. So what’s the alternative? You’re in a bind and need money quick. Remember, as mentioned above, ask yourself, do you really need the money now? Now= someone will die, end up in the hospital, on the street or in jail (even then) if you don’t get the money now.
How To Avoid Using Payday Loans
- Get a 2nd job
- Offer to complete small gigs/services for family and friends. This can include yard work, babysitting, cleaning etc. If you think you’re too good to do this then that may be part of the issue. Part of digging yourself out of debt is humbling yourself to what needs to be done to get out.
- Create an emergency fund
- Create and stick to a budget
- Prioritize your basic expenses. There is no reason why anything should come before the roof over your head, expenses related to getting you to and from work, electric/water/gas and food on the table (rice, chicken, beans, Ramen Noodles, frankfurters, and eggs)
Payday Loan Alternatives
Sell Your Stuff
Craigslist, Ebay. pawn shops and yard sales are a great way to raise money quickly when you’re in a financial bind. Search through your things and decide on what you can let go in the interest of paying your financial obligations.
Credit Union/Small Bank Loans
Smaller banks and credit unions are often interested in expanding their loan portfolios and may be inclined to lend you the money that you need. This of course, depends upon the amount needed as it tends to be at least $1000 depending on the bank. Call around to your local banks or if you anticipate needing a loan in the near future, join a credit union now. Credit unions often have a requirement that you be a member for a specific amount of time (example: 6 months) before deciding to lend you money.
Negotiate A Payment Plan
If you owe money to someone, hospital or a local business then ask if you can negotiate payments instead of scrambling to dig yourself deeper in debt which only perpetuates the cycle. They may be willing to do this but you must first ask to see what options may be available.
I’ve discussed Billfloat in a previous article here: Billfloat Review. For those who are in a financial bind with specific bills to pay, this is a great alternative. Click here for state specific pricing as it varies depending on which state you live in.
Taking out a payday loan could hurt your credit in a way that will take you months or years to repair. Really consider your situation and the available alternatives before jumping into a payday loan arrangement. I hope this was helpful! Let us know in the comments area about your experience with a payday loan. We’d love to hear about it! This helps readers get a realistic point of view from someone who has been where they want to go.