More than 12 million Americans take out payday loans each year. These short-term loans are easy to obtain and are designed to carry consumers over between paychecks (hence the name.) Although, payday loans carry a higher interest rate than most traditional bank loans, since they are only designed to be taken out for a matter of days or weeks, this higher interest doesn't add up to a large amount.
Used responsibly, payday loans can help give you the funds you need for things like a health emergency or an unexpected car or house repair. However, an emergency is just one of the situations where a payday loan might make sense.
When payday loans make sense
1. To get funds for a health emergency. Since bank loans traditionally take several days to process, a payday loan can be a good choice to get funds for an emergency while a loan with a lower interest rate is in the works.
2. To avoid incurring a large late fee. Another good reason to turn to a payday loan is when being late with your payment will cost you more than the fee and interest on the payday loan. Mortgage companies often have sizeable late fees.
3. To pay for a car repair. If your car breaks down, you may not be able to get to work to make money. Therefore, taking out a payday loan to pay for that car repair could actually save you money.
4. To avoid bounced check fees. Many banks today charge daily, rather than one-time, fees for having insufficient funds in your account to cover a check you've written. If you have to wait a week or so until you have the money to cover your overdrawn balance, this could very well be more expensive than the fees associated with a payday loan.
5. To avoid losing your utility services (and paying a large reconnection fee.) Yet another situation in which taking out a payday loan makes sense is when you are facing having one of your major utilities disconnected (not something like your cable TV service.) Not only can losing power or heat be uncomfortable and inconvenient, but you could have to pay a large reconnection fee and even a security deposit to get your service started again.
While the decision to take out a payday loan should be make carefully, these loans can be beneficial to help pay for an emergency health issue, an unexpected repair and to prevent you from incurring a hefty late charge. For more information, talk to a professional like Payday Express.