Payday loans are short-term loans that provide small amounts of cash. These loans are easily accessible but with high-interest rates. You can get payday loans online or in high street shops.
However, explore other alternatives before you consider taking out a payday loan.
If payday loans are your only option, compare various payday lenders’ fees and interest rates to get the best deal.
In this post, we’ll go over when you should consider taking out a loan and when not to.
Payday Loans Should Be The Last Resort
Only consider taking out a payday loan if you need quick cash, and all the other options are unavailable. However, as you consider this deal, review the loan terms to understand the choice you’re making.
You should only take out a payday loan during emergencies. For instance, you can take out 1 month payday loans from Viva Payday Loans to cover the cost of vehicle repairs if you urgently need to fix your car.
While such a decision will have dire financial consequences, the benefit outweighs the cost.
Before you take out the loan, ask yourself whether it’s just a temporary fix or if the loan will provide a long-term solution.
For example, if your rent is due and you don’t have money, and you’re considering a loan, ask yourself whether taking out the payday loan will help you save your home, or you’ll be in a similar predicament next month.
If you’ll be facing eviction the next month, there’s no for the loan as you’ll be accumulating debt. Consider moving in with relatives or friends until you’re stable again.
Take Out A Payday Loan Only If You Can Afford It
One of the biggest mistakes many people make is applying for a loan without considering how to afford it. While this is understandable, it’s crucial to analyze if you can afford a loan.
When inquiring about the conditions, ask about the monthly repayments. This will help you make an informed decision and determine the loan term.
Negotiate the conditions with the payday lender to settle on a suitable repayment schedule. Ask the lender to increase the repayment term to reduce your monthly payments. Consequently, you’ll be able to meet your obligations comfortably.
Avoid Payday Loans If You Have Other Alternatives
Explore other possibly cheaper alternatives before settling on taking out a Payday loan.
Payday and short-term loan providers make promises of “no credit check,” “guaranteed approval,” and “fast cash.” A payday loan may be your only resort when faced with an emergency, and you need funds urgently.
These loans can be costly, targeting people in dire situations; some term these as examples of predatory lending.
Before resorting to this fast-cash offer, consider the following financing alternatives:
- Credit cards: You’re better off using a credit card to pay for essential purchases rather than taking out a payday loan. Although credit card interest is expensive, the amount you’ll pay on the card isn’t close to what most payday loans charge.
Credit cards are a better option even if you decide to take cash advances from the card—through cash advances have higher APR rates and fees than standard purchases on many cards.
- Personal loans: These loans have lower interest rates than credit cards or payday loans, and they also offer a set repayment timeline. Paying off a personal loan on a fixed schedule with affordable monthly payments is better than taking out payday loans repeatedly.
It’s also better than having credit card debts with higher interest rates that could take decades to pay off if you pay only the minimums.
Payday alternative loans: Credit union members who need urgent access to small cash amounts can apply for these short-term loans.
- These loans are more affordable and have better financing options than payday loans for those with short-term financial needs. The fees are capped” there’s a limit on the number of payday alternative loans you can acquire in a year.
You can also borrow from your family and friends, sell items you don’t use, get a temporary side hustle, and explore alternative funding sources before applying for a payday loan.
For instance, if you want to consider a payday loan to settle urgent medical bills, you can alternatively ask your caregiver if a payment plan is available.
Bottom Line
Only take a payday loan if you have no other option. You should only take out payday loans to circumvent a worse financial crisis.
No matter your situation, look for a more affordable financing option and resort to a payday loan only if you’re completely stuck in debt, as this will eventually worsen your financial situation.
Viva Payday Loans has proven one of the reputable loan matching services and can connect you to the best lenders in minutes.
The application process is seamless, and everything is done online, so no more paperwork stress.
