In today’s economy, it’s nearly impossible to find someone who has not been in a financial bind. Often times, people are able to tap into their savings accounts, retirement plans, or borrow money from family or friends to get through a rough patch, but not everyone is that lucky. Sometimes, people have to turn to personal loans and payday advances to make ends meet. Knowing when and how to use a payday advance can mean the difference between getting out from under a dark financial cloud and being hit by a hurricane of debt.
Getting a Payday Advance
Getting a payday advance is pretty straightforward. If you have a job and or verifiable income, you can get a payday advance, regardless of your credit rating. You can find hundreds of websites that offer online payday loans and can get you the money you need in as little as an hour, but typically it takes anywhere from 24 to 48 hours. If you go into a payday advance store, you can walk out of the store with the money within an hour or two, assuming you remembered to bring your checkbook, employment and income information, and identification.
The General Costs
Aside from the standard fees that are associated with a payday advance, potential borrowers need to expect to pay a rather large amount in interest. Depending on your credit rating (for some companies), the amount you want to borrow, and how quickly you end up being able to pay it back, borrowers should expect to see an interest rate of 200 to 500 percent. This is in addition to application fees and transaction fees.
Knowing When to Use an Advance
Payday Advances are not always the best solution, but for those who have no where else to turn, they can be a blessing. Ideally, you want to use payday advances as a bridge to cover the difference between what you have, and what you need. If you are behind on a utility bill and are a couple of hundred dollars short, then a payday advance might be the solution for you, just be mindful that it doesn’t turn into an unbreakable cycle. This often happens when a borrower takes out a payday advance to cover more than what is needed and puts them into a deeper hole than they had expected.
How to Avoid the Pitfalls
Once a financial emergency strikes, it throws everything into chaos. You’re stuck “robbing Peter to pay Paul”, as the expression goes. This normally ends up with more bills falling behind and the need for an emergency loan or advance becomes even greater. When you go to get a payday advance or loan, make sure you only ask for what you need. Often times, you will be told that a cap or ceiling limit that you are available for. Just because you are told you can borrow as much as $2.500 doesn’t mean you need to take it all. Only take what you need, and nothing more. Factor in anything else that is going to need immediate attention because most payday advance merchants will not allow you to increase the amount you borrow until most, if not all, of the previous loan is repaid. This helps prevent you from seeking other additional payday advance merchants to cover another expense, putting your further in debt.
While most people shy away from payday advances, when used responsibly, they can be an incredible tool. Research several payday advance or loan merchants prior to committing to one in specific and do not be afraid to ask questions, like, “what happens if you cannot make one of your scheduled repayments” or “can you extend the terms of your loan to give yourself more time to pay it back?” The more you know prior to accepting your advance, the better armed you are in regards to repaying your loan.