Nat Sauteed
Payday loans can often be a financial trap from which many are unable to get out. Payday loans are normally associated with high interest rates, hidden fees and financial trapdoors built into almost every transaction. But are payday loans all bad? Or can they be helpful, especially, for new homeowners?
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Borrow Smart. Not Fast.
Most people who opt for payday loans do so for the wrong reasons. A payday loan should only be taken in cases of an emergency or when you need money urgently as the interest rate you pay on the loan is often astronomical.
In most cases, however, payday loans are taken to pay off recurring expenses. This is a trap as recurring expenses are just that “recurring”. Even if you pay the expenses for this month by taking a payday loan you will have to pay the same amount for expenses next month plus the interest for the loan you took. This adds up and soon you can find yourself not being able to pay back the loan or keep up with your monthly expenses.
Smart borrowing is essential when it comes to payday loans as if you use the service wisely it can actually be quite beneficial and depending on the circumstances save you time and money instead of costing you time and money. Think before you borrow. If you need money for something that isn’t absolutely necessary then avoid the urge of getting a fast payday loan and rather live stringently until your next paycheque.
When Are Payday Loans Advantageous
Use payday loans as a last resort and not the first choice when it comes to borrowing money. A payday loan is a good option if you are looking to purchase something special or valuable or need to take care of an emergency situation that requires additional money quickly.
These short-term loans can be real life-savers in this regard as they can be quickly processed and are offered in cash rather than bank transfers. Also, unlike banks, payday loans can be approved immediately with most payday loan shops open 24/7 for added convenience.
Payday loans are meant for emergency situations but unfortunately, a large percentage of people use these loans for recurring expenses which is not its intended purpose. If you are unable to keep up with your monthly expenses you need to seek other ways to borrow or curtail spending.
Payday loans are only advantageous if you need a loan quickly and in hard cash, generally, in the case of a one-off emergency. It is not meant to be a continuous monthly cycle of borrowing and reborrowing as that will result in you accumulating considerable financial debt over only a short span of time.
Demographic of People That Opt For Payday Loans
The demographics of people that normally opt for payday loans normally do so out of necessity not choice and include low-income Hispanic and African American households, fresh college graduates, and new homeowners. 73% of payday loan borrowers visit a storefront to secure a payday loan and these loans are more common in large urban cities especially in the Southern States of USA.
Sound financial discipline and knowledge are amongst the most important differentiating factors between those who get rich and stay rich and those that simply can not get out of that rat race. It is always advisable to seek the help of a financial advisor if you are having difficulty keeping your financials in check.
Advantages of Payday Loans For New Homeowners
Purchasing a new home can put a lot of financial stress on new homeowners especially when moving to a new city or neighborhood. Far from family and friends borrowing even nominal amounts of money can be a challenge.
So many unforeseen expenses can arise for new homeowners that can easily push their intended budget well over. Unforeseen expenses such as roofing pairs, general home maintenance, purchase of new furniture, changing door and window locks, etc. can all amount to a considerable amount of money and are necessary to take care of when moving into a new home.
Securing a payday loan can help provide a little breathing room for you to get everything you need to set up your home according to your needs without being constantly strapped for cash. A payday loan gives you essentially an extra paycheque that can take care of all the purchases you need to make outside of recurring monthly expenses to make your new home really YOUR home.
Once your new home is set up you can get back to focusing on your work and pay back the payday loan with interest when due. Taking out a payday loan once or twice a year to improve your home or buy something that improves your standard of life is how payday loans should be used in the first place.
The high APRs (annual percentage rate) and hidden fees can make payday loans quite expensive if taken out multiple times a year. However, if taken out once or twice they can help you secure the things you need without costing you too much in the long-term.
To learn more about payday loans visit https://personalmoneynetwork.com/payday-loans/
Alternatives To Payday Loans
After reading this if you believe that payday loans might not be right for you they are other alternatives you can look into for borrowing money. Personal loans come with lower APRs than payday loans and also generally have a longer duration when it comes to repayment. These loans can be secured from online lenders, banks or credit unions.
If you have a credit card taking out a cash advance might be a cheaper option than securing a payday loan, especially, for smaller amounts.
Asking your friends or family should always be your first option when looking to borrow. You might be able to secure a loan with no interest and flexible repayment options from a loved one looking to help you out in your time of financial hardship.
