A payday loan is a type of short-term loan that may be obtained a week or a couple of weeks before the next payday. The purpose of most people for obtaining payday loans is to augment shortage of money caused mainly by emergency expenses. The other terms for payday loans are paycheck loan, can advance and payday advance. In case you still do not have money to settle your payday loan on the agreed date, you are allowed to roll over your loan, but additional fess will be applied.
The Importance of a Payday Loan
A payday loan can be very useful in paying for your important bills like home rental, hospital bills, electric bills, telephone bills, credit card bills and other bills that are about to fall due. The need to obtain a payday loan usually arises when the allocated monthly budget fall short.
Availing such loan will prevent you from incurring charges or penalties, or even from having a bad credit record. This is the easiest way to get a fast loan to address your urgent needs.
Getting a Payday Loan: A Smart Idea?
Obtaining a payday loan is a smart idea if you will use it for your urgent needs and not just to supplement your wants. It would be very risky to get this type of loan if you are not fully aware that this is just a short-term loan that needs to be paid within a very short period of time. Careful planning and budgeting is needed. Here are a few situations that will tell us that getting a payday loan is a smart idea:
1. If you are trying to maintain a good credit score, availing a payday loan would be a smart move. Having a low credit score can affect your loan application in the future.
2. If you have a monthly obligation that has to be paid the soonest possible time like for instance, credit card bills. Rather than dealing with high penalties and finance charges, it would be a good idea to pay for such bills on time.
3. It is alright to obtain a payday loan if you would like to make sure that the checks you’ve issued will not bounce. The penalty for bouncing checks is quite high, higher than the interest of a payday loan.
Before obtaining a payday loan, the terms must be clear to you. You must be aware that the interest rate is quite high and that the loan must be paid back on your next payday including its principal amount.