Payday loans are the loan solution for somebody suffering credit problems, so there is a lot of confusion about what “the catch” may be. Payday loans are more affordable than specifically “bad credit loans”, and payday loan companies make it possible to gain an average maximum amount of $1000 within 24 hours.
So what is the catch?
Quite simply, you have to be responsible. Though credit problems won’t disqualify you from receiving a payday loan, financial recklessness is a red light warning that a reputable payday loan company will often deny an application for.
The ability to wake up $1000 richer can be very tempting. The most important thing to remember is that a payday loan is a loan. You must repay the money you borrow, so you should avoid the temptation to borrow a payday loan amount larger than you can afford to repay.
The need for “cash now” is a common one. Who doesn’t need to wake up $1000 richer?
However, one should not be attracted solely to the ability of waking up $1000 richer, because that’s not what a payday loan does. Payday loans are a low rate, short term loan to hold you over until your next payday.
Payday loans do not make you richer in the long run. The longer it takes to repay your payday loan, the more it will cost you in fees that are added to the payday loan amount originally borrowed.
The best thing you can do for yourself is to only apply for a payday loan that you know you are capable of repaying, and to repay your payday loan as quickly as possible. Having realistic expectations of the payday loan service is beneficial to your financial health.
But what happens when you do receive your cash advance? It can be easy for some people to forget that it is early money and not extra money that is suddenly available. No matter how easy it is to have $500 in your pocket within the next 24 hours, you should not react to receiving that money as if you just won $500 in the lottery.
How responsible you will actually be with the money you receive in a payday loan will determine your ability to plan for a more secure financial future. Payday loans are designed to give you the money you need now, for something that can’t wait until your next payday.
While you may be swept away with the feeling of ‘waking up richer’ your priority with the borrowed money should be taking care of your unpaid bill and not ‘splurging’.
‘Splurging’ is financially reckless, because you will then have both the unpaid bill and the payday loan to pay. If you were in a position to have a need for a payday loan, your payday loan should not be used recklessly.
Financial responsibility is the ability to prioritize your needs over your wants. Payday loans should primarily be used for an urgent financial need over something you want that can wait.
