We all have been there before. It’s been a hectic month. Maybe some unforeseen expense like your car breaking down wrecks havoc on your financial routine. The only time you are expecting money is at the end of the month and there is still two or so weeks to go. This challenge led to the introduction of what has come to be known as payday loans. How it works is that you borrow money and allow the lender to debit the repayment amount from your bank account once your paycheck comes in. Though this credit instrument is rather infamous for its typically high interest rates, there are ways one can benefit from it.
Firstly, when taking out a payday loan, there is no inquiry entered into your credit report. Transactions are mainly ‘over – the counter’ given the usually low amounts of capital required. This means that the turnaround time of applying, being approved and getting your money is much shorter, in most cases within a 24 hour period. This is contrary to the case of banks and larger finance houses. The ability to access money that quickly can offset the ordinarily high rates, particularly if it’s a onetime loan.
Another time that getting a payday loan is a good idea, is when the cost of not taking it is much higher than whatever interest rate you may have to pay out. For instance, if you are falling back on your car payments and are only able to pay at the end of the month. In this case, not paying your car note means you will jeopardize your credit history as well as risk repossession of the vehicle in the long term. To maintain a good relationship with your automotive lender, it may be a great idea to get a payday loan.
As already alluded to, sometimes life happens, unexpectedly. If your vehicle breaks down or a family member suddenly comes down with an illness you may be left with no option but to opt for a payday loan. In such situations it may not be possible to postpone the cost or wait till the end of the month. Regular finance institutions may also not be an option due to their stringent requirements and long turnaround time.