Did you know that payday loans are a $9 billion business in the United States alone?
Payday loans are given every day as short term credit. They may involve a person writing a post-dated check (dated to the cheque writer’s payday) to an agency. The agency will advance the amount on the check there and then. When payday comes along the credit provider cashes the cheque and is refunded the amount.
Payday loans have advantages and disadvantages. If you are thinking of taking one out – what should you be aware of?
Check out our list of the 5 helpful tips on using Payday loans.
Check the Details: Interest Rates
Interest on Payday loans is famously high, even up to 300-400% APR sometimes.
We get it. Sometimes there seems to be an opportunity that seems too good to be true, and you just have to take it. However, before you ask for money, check these details very carefully.
Any delay in repaying the loan could leave you with a financial mountain to climb.
Avoid Using Multiple Lenders at All Costs
Payday loan companies want to be sure that they will get their money back. Because of this, they may only guarantee that you can loan a small amount of money.
If a person wants more, it could be tempted to go from company to company, taking smaller loans out. However, this should be avoided at all costs. Unseen costs could appear that means you are not able to repay the loans with a single paycheck.
This can leave you in serious debt when you consider the high interest rates charged.
Why Do You Need the Money?
We all like to splash out every now and then. Taking your partner to that expensive restaurant, that pair of hot Balenciaga shoes.
However, if a person is regularly looking for cash advances, they may need to ask themselves whether they are living within their means. Living within your means, living a life that is realistic for your income.
The Best Payday Loan Providers
There is no official institution that represents lenders. However, the Financial Services Association (CFSA) is an institution that has established best practices for payday loan lenders.
These are not in force nationally, however, members of this association are bound to comply with its principles.
In short, look for a lender that is part of the CFSA.
What Are the Alternatives to Payday Loans?
If a person is in financial difficulties, in simple terms, they can either increase their income or reduce their outgoing expenses.
Millennials are famous for their side-hustle jobs. They work a few hours extra each week either online or locally. The money that they earn from these amounts to a sizeable amount each year.
Other alternatives include borrowing from credit-cards and other low-interest lending institutions.
Make the Best Use of Your Money
No doubt you are looking to make the best of your money – whether it comes from payday loans or not.
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