February 17, 2020 2 min to read
Things to keep in mind before applying for a payday loan
Category : Finance
We all know how tough it can be to manage expenses in this downward spiralling economy and no matter how much you earn; a significantly high percentage of your income is wasted covering up your expenses.
If that is not bad, then imagine with each passing year, your real income is taking a hit and decreasing steadily while the expenses are ever rising.
And when lady luck is not by your side, things sometimes tend to get worse. Let’s say a financial emergency strikes, and you land yourself in a hot situation with a shortage of cash while facing a cash crunch and that your current income is unable to sustain and bear the brunt of your huge utility bills and the ever-lasting debts and mortgages, then what do you do?
In a situation like these where you need to borrow money and without the availability of any emergency loans, you find yourself in a situation where you are out of options, so what do you do? In a situation like these, it is best that you opt for a payday loan.
So, what is a payday loan?
A payday loan or cash advances are a type of a short-term loan where borrower borrows money for a short duration usually up to two or three weeks.
These loans have a simple structure and offer short term, low balance borrowings. They are easy and simple to understand and provide quick credit until your next payday.
The flips side of all this is that they charge exponentially high-interest rates and have hidden provisions such as added fees and other charges, which most of the borrowers at the time of the borrowing are not aware of. And because of all this, they are sometimes referred to as predatory loans.
So, before you make a decision on whether to opt for such loans, here are a few take away which you should keep in your mind.
1. Your Financial Situation
It is essential that before you opt for a loan, you should be aware of your financial situation. You need to be honest with yourself and decide where you are standing right now and that whether you will be able to squeeze your finances without going for it.
In case if it is not possible and you need it to survive, then you need to consider and asses the total costs and benefits of this loan.
And in the scenario that if the total benefits outweigh the total costs, then you should opt for it otherwise not.
Another factor that you need to cater in is the future obligations and requirements that you would need to fulfil and that whether you can fulfill them without paying a huge penalty or not.
Continue reading the article and learn more about payday loans on Life Is An Episode website.