If you are in urgent need of cash because of an emergency expenditure such as the breakdown of your car or a plumbing leakage, the first thing you may consider is a payday loan that will give you access to cash quickly to take care of the emergency.
Especially when online platforms like Honest Loans has made it so much easier to take out a payday cash advance, it just seems like the only sensible thing to do when you need access to cash.
Hold your horses as taking out a payday loan should not be done without considering a lot of factors. We have discussed a few crucial ones below.
Understand the Purpose of a Payday Loan:
Before you avail of the loan, understand why lenders make a short-term loan so accessible to borrowers. These loans are not meant to be used all the time, for starters. Borrowers should not see a payday loan as a regular loan, just like the use of a credit card every month.
You have to bear in mind that loans that have a short repayment time charge a high-interest rate hence, if you default on the loan; the loan becomes that much more expensive and tough to repay back. A payday loan is designed only for emergencies and should be availed only when there is no other option left.
Understand the Risks Associated:
When you think of obtaining a payday cash advance, you should understand the risks associated with it and carefully weight your options. It is the best practice to take out a payday loan amount that is less than your normal paycheck amount. This way you will for sure be able to repay the loan back and still have enough to handle your monthly expenses.
If you take the loan amount of your full paycheck amount, then you will find it tough to repay the loan back along with taking care of your expenditures. Hence, you may need to request for a rollover, which can become a vicious cycle. Taking out a payday loan is ok only if you are sure you can repay the loan amount back timely.
Calculate Carefully How Much Money you Need:
It is important to exactly know the amount you are seeking as the fees associated with the payday loan is steep. Also, you have to repay the money back in a few weeks, hence taking out more amount is not going to be that helpful. Hence, carefully calculate the money you need and only apply for that as the loan amount.
Understand if You Can Afford to Pay Back:
The thing about the payday loan is that lenders make them really accessible to you, which can work as an advantage as well as a disadvantage. Applying for a loan is so simple, especially with user-friendly platforms such as Honest Loans, you can secure a payday loan on the same day. But you have to first question yourself if you can truly repay the loan back timely? If you feel you will have to seek a rollover, then do not avail of a payday loan and look for alternatives, as the loan can get expensive really soon pushing you into a debt trap. Apply for a small loan amount that you can easily repay back with your next paycheck. This will help improve your credit score as well.
Understand How Taking a Payday Loan can Affect Your Credit Score:
Finally, you cannot ignore how taking a short-term loan affects your credit score. Any short-term loan like a payday loan and leave it in your credit records.
You may consider applying for a payday loan from different lenders to increase your chances of securing one, but it would make lenders nervous as they see different loan applications to different institutes. These different footprints will make a negative impact.
This is why platforms like Honest Loans work in your favor, as you will fill out a single application form for the loan on their platform and will get connected to multiple lenders. Most lenders they are linked to only conduct a soft credit check, which will not affect your credit score. Learn more about securing a payday loan with a bad credit score at Honest Loans today!
Read the Terms and Conditions Carefully:
Every time you apply for a payday loan, you have to read the terms and conditions of the loan agreement carefully. Lenders who offer you loans when you apply for a payday loan via Honest Loans are transparent in their dealings, hence you need not worry much. But they still encourage you to read all terms carefully before you agree to anything. Remember, you may receive several loan offers, but you are under no obligation to accept any loan offered to you by lenders until you are convinced it is in your best interest.
Consider the Full Cost of the Loan:
Payday loans usually come with high-interest rates and you need to ensure that you consider the full loan cost when you are considering taking this loan to fulfill your cash needs. Think carefully if you can really repay the loan plus the fees back timely.
Using platforms like Honest Loans ensures that you will be connected to reliable lenders who will offer you a loan at fair fees but still you have to consider if the full cost of the loan is affordable or not. Typically, lenders charge somewhere around $10 to $30 per $100 borrowed, so if you take a loan of $400, then you will have to repay back at least $40 as fees in addition to the principal loan amount. Calculate the full loan amount before availing of one.
Seeking a payday loan is a great idea in emergencies, but make sure that you have exhausted other money lending options before you opt for a payday loan. If you are already struggling with debt, getting in deeper will not help your situation. A payday loan not repaid timely can be a burden to repay back as the fees get higher with each rollover. Take a strong peek at your financial health today to steer clear of all debts in the future.