Payday loans are sometimes seen as a “last resort” option for borrowing money quickly when you need it most. However, many people would argue that applying for, getting approved for and using payday loans responsibly and appropriately is by no means a last resort, but rather a beneficial and sometimes necessary method of borrowing money.
Truly last-resort options, which are not recommended, include stealing, bankruptcy, maxing out all your credit cards, getting into the negatives with your checking account and borrowing money from all your friends and relatives without paying them back and straining all those relationships.
Payday loans can really get you out of a jam, financial crisis, emergency or unexpected expense. Sometimes people don’t have a savings account, more than $10 in their savings account, a line of credit, any credit cards or their credit cards are maxed out, but they have a steady, full-time job and a checking account. For these individuals in these situations, when an unexpected expense of $500 comes their way, a payday loan is not a last resort but a great option and sometimes the best thing they can do at the time.
A lot of the time, people who call payday loans a “last resort” usually refer to the high interest rates incurred with borrowing money from a cash advance store, whether it’s in person, over the phone or online.
For example, to get a $100 payday loan for a two-week period, a typical cash advance lender could charge a fee of about $15. A $15 finance charge on a $100 loan is equivalent to 391 percent APR. However, the fee is not charged up front. Instead, the person borrowing the money will write a postdated check for the amount borrowed plus the fee (in this case, $115) to come out on the next pay day. At this point, the borrower has the option of “rolling over” the loan for another two weeks, incurring an additional fee of $15. Different states have different restrictions and limitations on rollovers, but theoretically, if a borrower chose to roll the payday loan over a total of five times, the finance charge to borrow $100 could be $90.
Obviously, the interest on payday loans can easily skyrocket, which is why many anti-payday loan advocates warn potential borrowers to either stay away or only use payday loans as a last resort. However, if you are responsible and determine you will pay off the loan amount plus the fee at your next pay dayand at the most roll over your loan only oncethen payday loans can be great solutions for helping you get out of a jam, providing you that emergency money when you need it most.
Payday loans are not for everyone, and are also not for every situation. But for the right, non-risky and responsible borrower, a payday loan may be just what you need to deal with that sudden, unexpected financial crisis quickly, conveniently and discreetly.
Paycheck Cash offers several cash advance loan comparisons, along with referrals to the best place to get an online loan in 24 hours. A quick two minute application and you can have your payday loan tomorrow.