5 questions to ask yourself before applying for an instant payday loan
Like short term loans, instant payday loans are a great convenience when you are suffering through hard financial times. However, you should never forget that paying for things you want, and also paying the principal loan amount plus interest, can stretch you so much that you can run out of money before the end of the month again.
1. Am I really in need of a Payday Loan?
If you are in such a scenario, ask yourself if it is absolutely essential to take out a payday loan, or if that new gadget or vacation can wait. If you are well aware of the additional costs of paying for the things you want and that you can pay for them out of your next paycheck, then taking out a payday loan should be no problem.
2. Are payday loans the perfect solution for the amount of money you need to borrow?
Payday loans are usually short term loans typically valuing anywhere between $500 and $1,500. How much you should apply for depends on your capability to pay it back. Payday loan agents are not likely to lend you $1,500 if you only earn $500 in income. Since you have to pay back the loan on your next payday, you should not look for more than what you can afford to pay back. If the amount of money you need is huge, then you should look for other forms of loans available in the market.
3. What is the time duration you need a cash advance for and can you really afford to pay it back?
A cash advance is mainly provided to support you between the time you are out of money and the time when your next payday comes. Payday loans are not an ideal solution to borrow money for longer periods of time, as you have to pay back the loan amount within a fixed duration of time. The loan repayment time can be extended by paying interest fees every month until you clear the full balance. However, if this happens, it will cost you more than your original loan amount. So these loans are designed for shorter durations of financial needs only.
4. What do I need to meet the criteria for a payday loan?
The criterion for most payday loans is very simple. If you are a permanent citizen of an area, over eighteen years of age, have a full-time employment and a bank account where your wages are paid directly into – you may be eligible.
Most payday loan companies require you to have full time employment when applying online. This gives them a sense of security that the repayment of the loan amount will be on time. Also, you will need to have a direct bank account where your wages are paid to consistently. If you are paid with cash or check by your employer, you will not be eligible for a payday loan with certain lenders.
5. Can I afford to pay the loan back?
You should go for a payday loan option only when you are sure that you will be able to afford to repay a payday loan. Otherwise, it would be better to look elsewhere to solve your cash problem. Payday loans are a financial benefit at times when you need cash urgently and cannot wait till your next payday. But these loans are not a great idea to satisfy your luxury purchases and/or lifestyle if you are not sure that it will be easy to pay them back on time. The interest rates attached to these loans are high. Most payday loan companies usually charge an interest fee of 391% APR, and if you do not payback on time, an extra fee is charged over the principle amount.
So be sure to apply for a payday loan only when you know that you can pay it back on time.