A payday loan is something that is always the talk of the town. Some might find a dependable rescue option when bad credit stops to fix a financial emergency, while a few prefer to stay away from it as much as possible.
This might make you wonder whether it’s the right choice for you. Well, it is if you get it from a trusted lender. In this post, we will talk about the situations when getting a payday loan will work best for you. Also, we’ll talk about scenarios where you should avoid it by all means.
Get A Payday Loan Without Any Worries
You can read about payday loans in detail on the given link. We won’t discuss it much, but focus on your question, “Should you ever get a payday loan?” here. Let’s start talking about the scenarios where getting a payday loan is suitable.
Payday loans are mostly asked for or sought out by people with bad credit scores who are facing cash flow challenges.
A recent study by the Pew Charitable Trust revealed that nearly 69% of payday loan users take the help of this loan because they have to deal with any expected expenses, bills, rent, or mortgages. People love it because it’s not bothered about their credit score and asks them to use any asset for collateral.
Considering all these points, it’s easy to conclude that payday loans are useful when:
- You have bad credit and no conventional money lending options are offering you cash. Payday loan lenders are not interested in knowing about your credit score and will provide money in any situation.
- There is no pricey asset to use as collateral. Banks and pawn shops will ask for assets for security while availing you of a loan. But, a payday loan will provide you with money without asking for an asset. So, people who have no pricey possessions can take advantage of this loan type.
- You need flexible repayment terms. With a trusted payday loan broker, it’s easy to pay back the loan amount on your terms. Flexible repayment terms endow the lender with a great sense of security and hassle-freeness.
- You need immediate cash. Payday loan processing is super-fast and doesn’t take much time. Starting from loan application approval to credit transfer, everything is swift. The amount can be transferred to your account by the end of the day or the next day. This speedy fund transfer is useful when people need emergency funds.
- You don’t have a bank account with strong financial standing. Many people don’t have bank accounts. Independent payday lenders can hand over the cash to you. There is no need to have an active bank account.
- The amount is not too high. Payday loans are suitable when you don’t require a huge amount of lending. Mostly, people avail this loan facility when they need immediate funds up to $5,000.
- You don’t want to damage your credit score. Your credit score will dip if repayments are delayed or the lender makes a request to know your credit score. Payday lenders don’t do hard credit score checks. Only a soft pull is done that doesn’t harm the credit score. This way, you won’t harm your credit score at all.
When you’re in all these situations, you don’t have to think twice about availing of a payday loan. But, you need to keep a safe distance from a payday loan in certain situations. For instance:
- If you don’t have a stable job or income, repayment of a payday loan is due on the next paycheck of the borrower. So, if you don’t have a stable job or a fixed salary day then it’s not wise to avail of a payday loan.
- Avoid payday loans when you are in a financial crunch very often.
- Availing of a payday loan every now and then is not a good idea because you’ve got to beat the high-interest rate with each loan. It will exert a high financial burden on you.
- If your state law isn’t very payday loan-friendly, many states consider payday loans a financial trap and have stringent policies to stop people from availing of them. If you belong to such a state then it’s preferred to avoid a payday loan.
Payday Loan – Is It Worth Taking?
A payday loan is worth a try when you have a stable income, need a small amount, live in a payday loan-friendly state, need cash urgently, and want to enjoy flexible repayments. With this no-credit-check loan, people can fix any financial crunch. But, we suggest you avoid it when you need loans very frequently and need a large amount as a loan. In these situations, a payday loan will only make things worse for you.