Payday loans have gotten a bad reputation over the years, but not because they do not have value, but rather because many people who utilize them do not utilize them responsibly. The fact is that these are not for everyone as they are meant to serve short term needs only. If you are trying to fix a long term problem or you won't have the money come pay day to pay back the loan, a payday loan is not for you.
Using Payday Loans Wisely
Many people complain about payday loans and the trap that they get into when they start using them. The fact of the matter is that they are for short term use, which means a week to two weeks. This type is for those that are between pay periods and they need some extra cash to pay for medical bills, car repairs, house repairs, and that sort of thing.
The problem that many people have with these loans is their interest rate. These loans do have a very high interest rate, in fact the federal government has thought about stepping in and putting a limit on how high the interest should be allowed to go. You can pay extraordinary amounts of money in interest, but when you are only borrowing for one week and you are really in a pinch and you need the cash, the interest isn't all that bad.
For instance, if you need to borrow $300 until pay day you may actually need to pay back $375 or more when you get paid. This seems like a lot, but sometimes when you really need that money now, the $75 that you pay in interest is worth the convenience of being able to take care of whatever pressing issues that you are dealing with.
Now, if you are simply getting behind on money and you take out the $300 or more and you simply carry theamount over from week to week, you are throwing money away! If you are paying this interest amount every week or two weeks and you aren't paying off them and you aren't getting ahead it simply doesn't make sense to take out the loan.
Payday loans really are for those that are responsible with their money and have a pressing need to have access to a bit more cash before payday. The whole idea is that you give the payday company a check for the amount of money that you need in addition to interest. They give you that amount of money in cash and when you get paid they deposit the check and the whole loan is closed out and you are done.
What many people do is continue to carry the loan from week to week. This might be fine once or twice, but if you keep doing it you'll just dig yourself in deeper and deeper. Many people find that they are never able to pay the full amount of the loan back. They should only be considered as a last resort and when the borrower is in a true pinch.