When Is It A Good Idea To Use Payday Loans?

Using payday loans is risky business. They are expensive and difficult to pay off. However, there is a time and a place when they make perfect sense to use. In this post I want to cover when this is, and share some details of why they are so risky. One of the biggest things I preach on this site is to arm yourself with some knowledge before you decide if fast cash loans are the right choice, and I feel that we haven’t really discussed this matter yet.

When Does It Make Sense To Use Payday Loans?

Emergencies are the most common time to use a loan like this. Car repairs that can’t wait, a new hot water heater, or paying the emergency room (unless they allow you to make payments to them). Other common uses for them are bills that fall between your paydays, namely your rent.

Uncommon things that still make sense are having to travel for a job interview and not having the money to get there, or having to buy school supplies for your kid. These are expenses that are mandatory, but since you’re between paydays you simply can’t afford them right now.

When Is It Not A Good Idea?

This could be a very long list, but we can sum it up with “just about everything else!”

Some people use payday loans for fun money, which is a horrible idea. You don’t want to buy food and smokes with borrowed money! That leads to wasting the money and then the payday loan trap, which we’ll cover in the next section.

Other times when these loans should be avoided is when your payday is still a long way away, or not coming at all, and when your next paycheck is already spent before you get it. It’s safe to assume that almost half of your next paycheck is going to be spent on paying your loan back, so factor that in as well.

So What Are The Risks?

Some times when people use payday loans they end up taking other loans to cover the ones that they have to pay back. This is called the payday loan trap, and it’s damn near impossible to get out of it. This article from The Nashville Ledger covers this perfectly if you’re interested in seeing just how bad it can be.

All problems stem from the high price and timing of repayment. You can expect to pay somewhere in the range of $20 for each $100 that you borrow. The amount that you actually pay is regulated by your state’s government, but you can expect to pay whatever the maximum amount is. Using the $20 from above, a $500 payday loan is going to cost you at least $600 out of your next paycheck, plus whatever ridiculous fees the lender is going to charge you. Can you afford to have that much of your next paycheck gone before you get to touch it?

The lender will likely give you the option to rollover your loan, or extend its terms. Accepting this offer is the precise moment that you start down the payday loan trap! Fees are added along with you borrowing more money, and until you’re completely clear from the loan every paycheck you get will go to the lender to cover this.

So Is It Worth It?

I firmly believe that you should do your research on payday loans then sleep on it before applying for anything. There are other options out there that can help out, check out these other articles on Fast Cash Authority for some ideas:

If you choose payday loans, please do so responsibly. There are a lot of ways to get into trouble with these, but it’s also easy to stay safe!

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My name is Lydia and I'm and expert at getting fast cash. I've been through it all, and now I want to share my experience with you

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