Is it ever okay to take out a payday loan?

Payday loans are loans that are short-term that have very high rates of interest. In fact according to the Consumer Financial Protection Bureau (CFPB) warns that payday loans generally have an APR of about 400 percent. However, since the costs associated with payday loans is usually described as the fees you have to pay for borrowing the money, many don’t know how high the actual interest rate can be. Visit for more information.

When you’re borrowing money for this price and interest rate, it’s nearly impossible to repay the amount you owe and remain free of the debt. If you take out a $100 loan that has an interest rate of $30 and you need to repay $130 the next payday, you might struggle to come to the money. If you do manage to repay the loan and you be in a financial bind before the next paycheck, which could mean you apply for a payday loan.

Due to the enormous cost and short repayment timeframe for payday loan loans a lot of people find themselves having to get another payday loan to pay back the original loan in time. It can happen over and over again, until you’re stuck in a vicious cycle of having to nearly always have at the very least the one loan for payday.

Naturally, this implies that taking the payday loan route is a huge risk for your financial health. Actually, the choice to get payday loans could have negative financial effects that can ripple through you for months, and which could might lead you to financial ruin if you don’t end the borrowing cycle.

However you might be wondering whether there’s any situations that allow you to apply for cash advances. This guide will help determine.

Check out all of your options prior to taking out the cash advance

Before even thinking about the possibility of a payday loan, you should consider exploring all other options first, since all kinds of borrowing are likely to result in a lower cost than payday loans. Other types of financing that you ought to think about are:

  • Loans for alternative paydays: These are short-term loans that are available to members of credit unions who require quick access to cash in small amounts. There are no fees and you’re restricted in the number of many payday loans you are able to take out annually. These loans are less expensive and provide a more affordable option to borrow money than payday loans if you’re facing an immediate financial need.
  • credit cards If you’re able to utilize a credit card purchase essential items instead of the payday loan, you’ll be more secure. Most of the time this is true even if you do end needing to take an advance on your credit card even though cash advances have more fees and APRs that are higher than normal purchases made with most credit cards. The truth is that credit interest on credit cards is extremely expensive but the amount of interest you’ll have to pay on credit cards isn’t nearly to the amount you’d pay on payday loans.
  • Personal loan:Personal personal loans are able to offer lower interest rates in most cases than payday loans and credit cards. They are also able to provide a fixed time frame for repayment. If you are able to pay off the personal loan on regular intervals with a reasonable monthly payment it is much better than having to borrow payday loans. It is also better than being saddled in credit card debt with the higher rate of interest that you may be paying for years if you just pay the minimum.

It is also worth considering borrowing from your family and friends and selling off items that you don’t require, establishing some side business for a short period and evaluating all options for funding before making a decision to take an advance loan. For instance, if you believe you require cash to pay the cost of medical treatment while you bring your child who is sick for a visit to the physician, it is recommended to first speak with your healthcare provider to determine if you may qualify for a repayment plan.

What happens if you’ve exhausted all possible options?

If you’re left with no other option to come cash and it’s absolutely essential that you have money at hand the payday loan might be the best and most effective choice. However, you must enter the process with your eyes wide open and with an awareness of the risky financial risk you’re taking.

Payday loans shouldn’t be utilized to cover expenses which aren’t true emergency situations. For example, if require a payday loan to pay for a car repair due to the fact that you have to own a car or be fired, it might be logical to get this loan. Sure, it could increase your financial burden for a short time, but the effects will not be as serious as losing your job could be.

But, you’ll need to think about whether a payday loan can be able to provide a long-term solution or if you’re just delaying larger issues. If you’re in the process of being expelled and are thinking about the possibility of a payday loan to pay rent, consider whether it will aid you in keeping your house. If the payday loan can pay for your rent for a month, but it’ll be insufficient to pay your rent in the next month, you’ll end getting evicted — and in the end, you’d lose your home and further in debt. If you don’t have another option and you don’t have a place to go, taking a payday loan might just not make sense for the single month’s reprieve.

A payday loan is never a good way to borrow money.

To summarize one thing: the only scenario in which this kind of borrowing could be a good idea is when you don’t have any other options in the first place, and getting a payday loan is the only option to prevent the possibility of a bigger financial catastrophe in the long run, and you’re not just delay the inevitable by taking out the help of a payday loan. In all other circumstances it is recommended to look for alternatives to financing that are more affordable or stay clear of borrowing for a for a period of time if you are unable to find the most cost-effective method to make it happen, as the loan will only cause your finances to worsen in the end.

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