June 8, 2011
When Payday Loans Can Actually Come in Handy {0}
Nobody likes predatory lenders. The smell of loan sharks is enough for most anybody to get sick over the insanely high interest rates and the crooked con games so many unsecured lenders use in their so-called legitimate business practices. But not all short term loans are created equal, and not all short term lenders are scammers. As much as payday loans and other high interest debts are the bane of the post-Recession society, they still have their place in practical function. The important thing is to know when is and isn’t a good time to use them.
Calculate before you get a short term loan. Many people assume that the payday loan is meant for groceries and other essentials you need before the next paycheck comes through. Often this is what leads people into the snare of long-term unsecured debt payback. You must understand the math before you get mixed up with a short term loan. The potential for a late credit card payment and the added late payment charge is a much more practical reason to get a payday loan, because the accumulated cost of a late payment could be more than the excessive interest applied to the loan. This is also the case for bills and payments that if skipped are more likely to have you reported to credit agencies which will damage your credit score.
Vacations wherein the guaranteed paid time off can pay off a loan upon return are also an example of when it’s a good idea to get a payday loan. This is especially the case if any last minute pre-arrival expenses have eaten into your spending money fund. But you certainly do not want to do this if you’re not expecting any income when you return. Honestly though nobody who is even remotely financially responsible should be using a short term loan to fund a holiday unless it’s an emergency and there’s a certainty it can be paid back on time.
Only commit to a short term loan if you’ve done the math and can determine without a doubt that you can pay the loan back without allowing the interest to quadruple or worse. It should only be for emergencies, and it should be used with complete recognition of it’s use being the less of two bad scenarios. Don’t ever let the loan’s payoff not be at the forefront of your brain, or else the sharks are going to bite you hard.
Image: renjith krishnan / FreeDigitalPhotos.net
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