Financial Emergencies can be Helped By a Simple Pay Day Loan
Posted by Rose Martin | Filed under Finance
A pay day loan works like other loans but with access to your checking account as the collateral. You write the check including a fee to give to the lender. Then on the designated day the lender cashes your check. Sometimes the lender will have electronic access to your checking instead of holding an actual check. For instance, if you need a loan of $100, you write the check or give access to your checking account in the amount of the $100 plus the fee.
Pawn shops are in a similar business except the collateral they want is not a check to hold, but something of value on which they will lend you a sum of money. The money they lend is about 20% of the items value when it was brand new. Payday loans are an alternate option for you when you don’t want to risk parting with your personal property.
You might know how this emergency came about, but you can’t always foresee emergencies. Your car didn’t know it wasn’t payday when it decided to be towed. Medical emergencies are typical reasons for needing extra cash. Deciding to buy a new stereo should not be considered an emergency. The regulatory agency for payday loans, CFSA, protects the borrower from excessive interest rates. Everyone has emergencies and you can get a pay day loan by walking into a cash advance store or going online. Some states have a cap on interest rates so be sure you understand what you will be charged. You don’t need confusion on top of this emergency.
If you are making a habit of paying back payday loans, that it good. But if you are in the habit of taking several pay day loans out at a time, that is not good. This signals a bad habit. For situations like this, you can get help from various online resources and learn why you have these financial habits. Asking for help to learn about budgeting is not nearly as painful as constantly being in debt.
When you make a payday loan, you may have the option of rolling over the loan. This can become a financial burden if you do it too often. Try to pay back your pay day loans on the date you agreed to instead of extending the due date. If you decide to borrow, commit to paying it back on time. You can also find out if your lender offers you the option to “pay down” your loan with the extension, so your balance will be getting paid off a little at a time.
Many myths about payday loans are just that…myths! The annual percentage rates may reach over 400%, but only if you continue to roll over the loan for a year! Credit card interest rates are just as high if you continue to carry a big balance over and over. Be wise before you make the pay day loan. They are intended to be short term only and should only be used to get through until the next pay date.
However, you do have alternatives. You can handle medical emergencies by talking with the financial department at the hospital or doctor’s office. Sometimes, they are able to set up payments for you that are manageable. Mechanics might not be as generous because they need to carry on their business with the money you owe them. Some smaller shops might be able to help you in a pinch. When you have exhausted all your alternatives, consider getting a pay day loan but be a responsible borrower.
If the payday loan is your choice, you should be sure that you carefully read through your loan agreement and that you totally understand everything before you sign. Make sure that you ask questions if you don’t understand something. Make a commitment to pay the loan back on time and to begin new financial habits that will help you with the next urgent financial matter that comes along.
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