Payday loans, from places like MaxLend, are only meant for short-term relief but are great to use in the event of an emergency. However, payday loans come with high-interest rates, normally around 400%. Many people don’t realize it until after the fact and end up putting themselves in more of a financial bind. So are payday loans really worth applying for? There may be certain circumstances that make it “okay” to take out a payday loan, especially if you have no other options for fast cash.
Alternatives to Payday Loans
Before considering a payday loan, you want to make sure that you have completely explored every other option you have. There are other options available that will cost less than a payday loan and can save you money in the long run.
- Credit cards- If you have available credit on your credit cards, you should consider using them for your emergencies, or essential purchases instead of a payday loan. Sometimes, you can even pull a cash advance from your credit card, even though these come with higher fees. However, the interest that you’ll pay on your credit card won’t even compare to what you’d have to pay on a payday loan.
- Personal loans- Most personal loans have lower interest rates than payday loans. These loans can also provide you with a fixed schedule and a monthly payment that is affordable. This is way better than being forced to pay back a payday loan in its entirety in just a couple of weeks.
- Payday alternative loans- If you are a member of a credit union, these are short-term loans available for speedy access. Fees are capped, and you will be limited in the number of payday alternative loans you can take out each year. However, they are affordable and easier to pay off than a traditional payday loan.
If you can, you should also consider borrowing from family or friends. You can also sell some items that you can really do without, pick up a side hustle, or explore any other additional sources before you apply for a payday loan.
What if I don’t have any other options?
If you really need to take out a payday loan because you don’t have any other options, payday loans can be used to cover real emergencies. For example, maybe you have to get a car repair taken care of right away because this is your only way of transportation to work, and you are already in jeopardy of losing your job. This is a prime example of a situation that may require you to take out a payday loan. Even if your financial situation depletes, it will only be temporary.
You will also need to determine whether a payday loan will provide you with a long-term fix or if you are creating bigger issues. For example, if you need to pay your rent, or else face eviction, you need to determine if the loan will actually help you keep your home. If the loan helps you cover your rent for one month only, but you’ll be back to square one in the following months, you’d just end up being evicted anyway. As long as you have some other place to go, you’d probably be better off without a payday loan.
Unless you have other alternatives to borrowing money, a payday loan may just make sense in your case. Just make sure that you are not just delaying the inevitable before you apply for a payday loan. There are some situations where you may be able to afford a better financial situation. …