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It’s no secret that almost every payday loan company has earned a bad reputation for charging extremely high interest rates to consumers.  There are instances when it may make sense to obtain a payday loan, however, and if used as intended- you may be surprised to learn that you don’t actually spend all that much in fees or interest.

Benefits of using a payday loan:

  • No credit check, so even if you have poor credit you can often obtain a payday loan
  • Quick application and approval in as little as one hour
  • Minimum requirements are not hard to meet (steady income, bank account, age requirement, etc)
  • Can avoid using credit cards for unexpected emergencies and have access to cash in between your pay periods
  • Provides access to cash when you need it, even if you aren’t able to get a credit card or personal loan in your name
  • Can be repaid when you receive your next paycheck with minimal fees or interest.
  • Interest rate depends on the state you live in

It’s true that if you use a payday loan and take weeks or months to pay it off that you’re going to be paying hundreds of dollars more than you borrowed.  Payday loans are not meant to be long term financial solutions, though.  They are called “payday loans” because they are meant to help people get from one payday to the next; and the money borrowed is supposed to be repaid when you receive your next paycheck.  If you use the payday loan in this manner, it is often less expensive than using a credit card – and for people who are unable to get access to a credit card or other source of financing, a payday loan can be the savior in an emergency situation.

If you decide to use a payday loan, let it help you by ensuring that you will be able to pay it back within one or two pay checks.  If you think there is a chance that you will not be able to repay the payday loan in that time frame, you should seriously reconsider using the loan.  In a pinch, a payday loan helps you resolve a financial situation when no other funds are available.

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