In today's economy, many of us are living paycheck to paycheck. This means that a simple and minor problem like a flat tire can leave us in the hole. When there's nowhere else to turn to for money, many of us consider payday loans, but are they a good idea? If you're in an emergency, a payday loan can be a lifesaver, but payday loans are really just a tool that can be used in a good or bad way, like anything else. Here are a few questions to ask yourself to determine whether a cash advance or payday loan is a good idea for you:
Is it an Emergency?
If you're opting for a payday loan, it should be a true emergency. Can the scratch on your car wait until your next paycheck? Probably. If your issue is cosmetic, it's best to leave it alone. But if you have a true emergency, like a medical crisis, a payday loan can help hold you over.
Have You Done Your Research?
Not all payday loan operations are reputable. In fact, some might be downright scammers. Before you sign any papers, be sure to do your research on what the average payday loan interest rate is, to avoid getting scalped. Don't forget to read the fine print! What are the Interest Rates? Don't settle for the first interest rates that you see. Be sure that you know what interest rate you can afford and what interest rates are normal in your area.
Can You Actually Pay it Back on Time?
When you're doing your research, you'll notice that many payday loan companies have harsh penalties if you fail to pay your loan back on the agreed upon date. Interest rates are already so high with payday loans, if you're wondering whether or not you will be able to pay it back on time, it's better that you find another option.
Will This Create a Cycle?
Taking out one payday loan can sometimes create a cycle that is hard to break. By the time you finally get your paycheck, you may have to pay most of it back towards your loan and interest. This can require you to borrow more money and put more on your credit cards. If you don't think you'll easily be able to repay your loan and that this might have dire consequences on your finances, a payday loan isn't for you.
Contact a company like Cash Depot Inc. for more information and assistance.