About Loans of the Payday Kind

By: Ajeet Khurana

Are you currently in a financial crunch and you are not sure how you are going to see your way out of it. There are times where you just have to wait out the financial problems and dig out one day at a time. This is something that most of us go through at some point or another, but if you have a short term need than you may find some help through a payday loan. A payday loan is a loan that is meant for short-term use only and will help you get through financially until your next payday, hence the name.

What You Need to Know

When you are considering a payday loan you should be aware that this type of loan is only meant to be used for a week to two weeks. The reason for this is that you are writing a check to the payday loan provider that will be cashed on your next payday. While you may only borrow $500 at a time you will probably be paying close to another $100 in interest. As you can see, this is a steep interest rate. When you are really in a crunch this can help you out in a big way but it comes at a price.

Payday loans are for serious emergencies such as car problems, medical problems, and bills that absolutely have to be paid or your utilities will be turned off. This is the type of stuff that warrants taking out a loan that carries this type of interest with it. If you simply need some money to go out with friends or on a vacation this is not the best choice, in that case you may want to look for a personal loan that will offer you the same amount of money for a lot better interest rate.

When you apply for a payday loan you will find that they may not even do a background check. Many times the company will simply have you provide them with a current bank statement and then you will write them a check and provide them with proof of your address. The check that you write will be for the amount that you are borrowing in addition to the interest amount.

The check will be cashed on the date that you get paid, because it is assumed that you only needed the cash until you got paid. This is a very convenient way to borrow money if you need it because you have to go into the office just once and then the loan is paid off within a one to two week period and you are done.

Occasionally people find that after they borrow the payday loan once they need it again. If you are in this position you should tell yourself that you will only take out the loan a second time and then you will be done with it. It is never easy to have a big, unexpected expense and to get back on top you may have to live simply for a couple weeks, but that is better than continuing to pay $100 every couple of weeks to borrow a couple hundred dollars. No one can afford those interest rates for the long term, so make sure you pay off your payday loan as soon as is possible.

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