It is quite a pickle of a situation to be broke in the middle of the month, and it is very natural to want to splurge on the payday. However, many times it is not the fault of the individual. Certain months may demand over-expenditure, be it for medical reasons or for relocation, transitions between jobs, legal payments and so on. Such over-expenditure could lead to scarcity of funds, especially if a person is not careful and does not have enough savings to back them up, or a favorable credit standing to borrow loans on an annual basis. It becomes impossible to get through the month, and borrowing from friends or family is often not preferred because of the informality that may make the transactions uncomfortable.
Many financial advisors counsel such individuals to opt for payday loans, which lend them money on the condition that they may return the money on their next payday. It is not very elaborate; the lender simply requires the borrower to write a check for the principal amount in addition to the credit fee in the favor of the lender, which the lender agrees to cash on the borrower’s stated next payday, manually or electronically. As a result, this kind of loan will give you enough and immediate liquid cash and you can sustain yourself for the rest of the month on credit.
Such a loan has multiple advantages and just as many pitfalls. The best pro of a payday loan is that it does not require the regular qualifications for a borrower, meaning that you can be eligible for a payday loan even if you are not eligible for many other favorable credit options available. The accessibility to payday loans is incredibly easy; you can obtain payday loans on simply an identity proof and a savings account in any bank. These loans are also very quick and convenient, cater to the masses of young salaried employees of the United States and offered in hassle-free online payments as well, which would take care of the most annoying thing about loans: the paperwork.
On the other hand, payday loans are extremely expensive, with the credit fee and interest being almost 300 to 900 per cent per annum. As a result of this, it is very easy for such a debt to accumulate over time and multiply manifold within weeks. It is possible, and indeed real in the case of many, to get carried away with the easy and sudden onslaught of liquid cash, and one may even end up borrowing more than one can return. As a result, many borrowers get caught in a loop of debt which weighs down upon them, both financially and psychologically.
The easiest way to avoid getting on the wrong side of the payday loan is to keep to the terms and conditions of the loan and pay back the amount borrowed by the due date. Since the duration of this loan is comparably short, it shouldn’t be much of a hassle to hold on to a steady source of income for a few weeks and pay back the loan in time. Make sure that you read the terms and conditions very carefully and don’t let yourself be taken for a ride by lending agencies. Conduct sufficient research in money matters and avail of the best suitable service available. Responsibility and prudency is most important, for it is necessary to bite off only as much as can be chewed.