There is a tendency for people to dismiss payday loans as not being useful or helpful to others. While there is a lot of talk about how payday loans have high interest rates and short loan times, those who criticize these loans do not understand their value. A payday loan can be a lifeline for someone who does not have too many other options.
Not everyone has the chance to go to a bank and get a personal loan. Most people who have poor credit cannot even get a credit card without having to pay a deposit. It is impossible for them to get an offer on a card with a 0% intro APR, one they could start using right away.
Such privileges are only available to those who have good credit, which is often synonymous with having a lot of money. It is why they may not understand the value of payday loans, but those who have been in poor financial situations do.
Payday Loans – Using Them Safely
No loan should be used without caution, because it can present trouble. The same is true for a payday loan. If you are serious about protecting your finances in the long term, make sure you are only borrowing an amount that you will be able to repay in the coming weeks.
People make the mistake of using online payday advance loans to borrow too much money. While these online payday loans for bad credit are useful, they should be used when there is a real emergency. The payday loan is not a way for you to buy a new gaming console because you have no money in your bank account. It is to be used when you have a serious need.
Using payday loans in this fashion ensures you are only borrowing what you need and can pay back.
There are very few other loans that are useful for people who have a poor credit score. Perhaps some would find a bit of help in collateral loans or car title loans. While these have their merits, they are asking you to put up your property as collateral on the loan. That is dangerous and can result in you losing your car if you miss a few payments.
That is not the case with a payday loan. Yes, there is an interest rate, as is the case with any loan in the world. But there is no collateral, and no one is coming after your property if you fail to repay the loan.
Rebuild Your Financial Portfolio
Having to take out a payday loan to pay a few bills would seem like a financial low, and it is true. You are not in a great financial situation if you have to resort to taking out $300 or $400 so you can make your finances whole before your next payday.
But you should think of it as a short term lifeline. You do not want to drown, which is why you take out the payday loan. You pay off your debts, deal with your short term expenses, only spend what you need, and then pay off the loan with your next paycheck.
You should still have enough from your paycheck to deal with your other financial obligations. Then you start saving, bit by bit. It will not be easy, but even if you start by putting $20 or $40 away each week, you can start to accumulate a nest egg.
Pretty soon you will find that you have enough money to deal with a rainy day situation. Say you have an unexpected bill, or you are not able to work for a couple of weeks. You have enough money to get by and then some.
Rebuilding Your Credit
Another step you should consider taking is to rebuild your credit so you have many options for loans. When you have a high credit score, you can get 0% APR credit cards that allow you to begin spending within minutes.
Getting that high score is not easy, but it is doable. Start by talking with collection agencies over any unpaid debt and get them to remove those records from your credit report. Then get a secured credit card and pay off its entire balance each month.
These two steps will help you get a better credit score within a couple of years. Then you will be in a healthier financial situation. In the meantime, ensure you are using payday loans whenever you are in a financial bind and need short term cash.
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