There are a number of good reasons why you might be considering a payday loan. Cash advance companies can offer a vital lifeline in the event that your expenses have stretched you too thin, and your next paycheck is simply too far away to be any help. If a payday loan is the only way you can access additional cash until your next paycheck, make sure you're using the service responsibly.
Borrow Only What You Can Afford
Payday lenders maintain both a minimum loan amount and a maximum loan amount. Avoid hitting the upper limit whenever possible, as the fees and associated interest rates can climb quickly. If all you need is $100 to put gas in your car until your next payday then only borrow that amount. You'll still pay the initial finance fee, but you'll stand a better chance of repaying the loan on time.
Pay it Off Immediately
Payday lenders usually offer loans on 7 to 14 day terms, after which point the loan can be rolled over and a new finance charge applied. Avoid doing this whenever possible, as it can put you in a bad position very quickly. Finance charges usually apply both when the loan is issued and again any time its term is extended. So, if a lender charges a $15 finance fee on a $100 loan and you extend it just twice you'll end up paying a total of $45 for the initial $100.
This is the same advice you'd get for any type of credit you choose to utilize, but a payday loan is often a much higher risk form of credit. As a result, it's also much more expensive, which is how lenders protect themselves and make their business profitable.
Plan for the Repayment
Taking out a payday loan today will mean being short by that same amount on your next paycheck, or more. With that in mind, make sure you take all appropriate steps to avoid being in the same position financially. Cut costs where you can, avoid unnecessary purchases, and reduce whatever expenses possible in order to make room in your budget for the repayment. Doing so will help you avoid extending the loan term and accruing another finance charge.
There's no such thing as free money, especially if that money comes with the word "Loan" attached to it. If you find yourself in need of a short-term loan, use a payday loan service as if you were borrowing from someone you know can't afford to give you the money in the first place. Cash advance services, such as Cash Depot Inc., can help in times of need but should be used responsibly.