Both traditional and online payday loans allow you to borrow cash very quickly. Companies such as Lendgreen don't expect customers to have references, six-figure salaries or perfect credit scores.
However, a payday loan can bring about serious financial and legal troubles if you don't use it properly. It's vital to borrow wisely by carefully assessing the situation and taking steps to promptly repay the debt.
Before you apply for a loan, verify that you truly need the money. Don't borrow cash to replace a defunct oven or stereo system; you can survive without it.
A loan may prove necessary if you face major consequences for failing to pay a bill. For example, perhaps the electric company plans to disconnect your power.
The loss of heating, cooling and refrigeration could ruin your food and create health hazards.
If you have a legitimate reason to borrow money, you can proceed to look for a reputable lender and apply for a loan. Be sure to complete the application form accurately.
Only request the minimum amount of cash that you need for necessities, and don't ask for funds that you can't repay on time.
If you prefer online payday loans, remember to fill out the form on a private computer with effective anti-virus software.
Payday lenders typically approve applications and send money to borrowers within one business day.
The cash arrives quickly, but it's crucial to set aside time to carefully plan your spending. Try to only use the money for its original purpose.
For instance, maybe you need a loan to replace your restaurant's cash register. If the new unit costs less than expected, keep the extra funds to help you pay back the loan.
Traditional payday lenders usually collect debts and finance charges by depositing post-dated checks. Borrowers repay online cash advances with electronic bank transfers.
Either way, it's important to avoid extra fees by ensuring that your account contains enough money on the due date. Consider using cash or a check to settle the debt early; you might receive a partial refund of the interest.
If the due date approaches and you don't have enough money, promptly contact the lender. You may obtain more time by asking to “roll over” the loan.
This will prevent your bank and the lender from charging extra fees because your account lacks sufficient funds. However, you will have to pay considerably more interest. Try to avoid this situation by limiting your borrowing and spending when possible.
If you take out multiple payday loans each month, it's time to find a better solution. The interest rates on short-term cash advances only remain economical for a week or two.
When people use these loans every month, they create financial burdens that become difficult to escape. Consider applying for government assistance, canceling unnecessary services or looking for a part-time job to supplement your income.
Keep in mind that it's hard to use payday loans properly if you borrow in an unsustainable way.
Short-term credit becomes helpful when you face unexpected costs and need cash before your next paycheck arrives. It's vital to address the underlying cause of any financial problem.
Jeremy Thompson is a freelance writer from Toronto, Ontario with ten years of experience in the finance industry.