A Payday loan is a loan that anyone with income and a checking account can take. They are also referred to as payday advance, salary loans, and various other loans. Mostly these loans are taken by people who are in a tough financial situation and are not able to meet the expenditure of the month. They take the easy way out and borrow money as payday loans. They are different from other kinds of loans and instead of paying the loan in installments, you have to pay them all together at once. In this article, some information about payday loans are given and also it is explained why you should avoid them.
A Payday loan is generally taken by over 12 million Americans per year. They might have trouble paying the rent on time, or don’t have the money to buy necessary utilities. They decide to take a Payday Loan falling a victim of the fancy advertisements. All you need to get this loan is to show that you are making enough money and a checking account. There are many places where you can get a payday loan which can be online, or in a storefront, or even in a bank. You don’t need a good credit score to get a payday loan which is why many people take this loan. How it works is that you tell the amount of money that you need as a loan and the institution that is providing you the loan charges a fee for the loan. Usually, you have to return the loan within two weeks and before that, you have to pay a one time fee to get the loan in the first place. If you fail to pay the loan back with the allotted time you can renew the loan by giving the same fees again. The fees are usually high and most people fail to repay the loan even after five months. The renewal fees become much more the money that was borrowed often and they still owe the institutions the original loan as well.
There a number of ways this situation can be avoided. The easiest one is to ask for help from your friends and family. Some people are too proud to do that and instead to take a payday loan only to realize that it was a very horrible decision. Another way to avoid the loan is to cut your expenses. Bring a change in your lifestyle to make sure that you don’t need the loan or live for a month with limited means. You can also work on building up an emergency cash fund in your bank account so you can use it in a tough month. You can work on it again after using the emergency funds in a tough month. You can also increase your credit scores so you can borrow from sources where the interests are much lower than payday loans. It is better to not take this loan as it causes many problems in the future compared to the short term relief that it gives.