Using payday loans as a financial tool

financial toolFor consumers who are having huge problems making their budget meet there are few problems harder to deal with than trying to make ends meet when you just do not have enough money. Having enough money to barely pay the bills can already be hard enough, but if you simply do not have enough money then you really need to struggle with ways to find the additional money that you need. Of course, what happens when you think that you are ok and suddenly find that you are very short on money? You are left with yet another huge disaster of course. This leaves a lot of people struggling to figure out what they are going to do, and how they are going to do it.

When you are looking at the costs of a payday loan, you are generally just looking at the average price of $30 in fees for each $200 that you borrow. This really does not seem that bad to most people. If you consider that this translates into a $15 fee for each $100 that you borrow it still really does not appear to be that bad either. However, if you consider that it will take you much longer than just a single term to repay the money suddenly it can start to look expensive. For example if you have to roll over your loan 9 times before finally being able to pay it off you are looking at a total of 10 fees and at $15 per $100 you borrow that’s a whopping $150 in interest alone for each $100 you borrow.

Starting to look like some terrifying numbers, I am sure. However, it is extremely important to remember that a payday loan is designed to help with short term financial needs. A payday loan is never the solution to a long-term cash need that you may have. If you do not think you can repay the loan in a period of no longer than one month it is generally advisable to start looking into different options that you can explore that will be able to help you in your money problems. The primary way that a payday loan can be helpful is when they are only used for short periods of time. Rolling over the loan continuously can make them very expensive quite quickly.

It is also important to remember that if you are just paying on the loan for a short period of time they can often be much cheaper than any fees or penalties that you might be charged for using a different method. For example, a bounced check fee can cost anywhere from $25 to as much as $50 regardless of the amount. If you bounce a check for $.25, yes just a mere quarter then you are looking at an enormous fee. However, a fee of that same size would have provided you with a payday loan, which would allow you to cover a larger number of bills for the exact same fee. Just imagine the chaos that could ensue if you accidently bounced three checks that were all for very small amounts. It would not take very long at all until your entire paycheck was eaten up just in bounced check fees. Moments like this is when payday loans can be your best choice, despite the fees that at first appearance may seem quite high.

Weldon Taylor

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