Imagine that you are about a week away from your payday. Suddenly, an unplanned event occurs and you find yourself needing extra money to deal with it. It could be anything an emergency visit to the hospital, an urgent bill that was overlooked, or maybe your car breaks down. No matter what the specific need is, the fact remains that you need money to pay for it and fast.
So what should you do? You cannot wait for payday that option is not possible. Maybe you can take out a loan from your bank. It could work, right? Then again, you would probably have to wait for a week or even more for that to go through. If that is the case, then you might as well wait for your payday but this is not an option.
How about considering borrowing money from a payday loan provider instead? It is so easy to do this just go online and fill out their application form. If it is your first time to borrow money from that particular lender, you might have to send in a couple of documents through fax. This could be your latest pay stubs and bank statement. Once approved, you merely have to withdraw the cash from your bank account within a day or two.
No problems, right? Yes, as long as you pay off your payday loan within the agreed amount of time. Fast forward a week later, you realise that the money you are going to use to pay off your original payday loan was supposed to be used for a weekend trip that you have been looking forward to. So you think to yourself, I am going to pay for the loan but maybe I'll take out another one to finance the trip. Good idea?
I think not. I believe in payday loans. I believe that they have been created for a specific purpose to meet unplanned financial needs. However, I also believe that if you have a pending payday loan and you find yourself needing more cash, it may not be the best solution to take out another one.
How so? This scenario could snowball on you. First you have one payday loan. A week or so later when the first one has not been paid off fully yet you take out another one, then you have two. Some time later, you still have the other 2, you think you need more money so you take out another one. Now you have three, and so on.
The idea behind a payday loan is for it to meet emergency needs. Emergencies are not the same as regular needs. Payday loans come at a price a bit higher than regular loans. If you take out payday loans as a means of regular cash, you would end up having to pay the price and probably get caught in a cycle of debt that you would find hard to get out of. This is precisely why there are people who are so against payday loans. They think that the concept is inherently evil when, in fact, it is not. What makes it bad is the way people handle their finances and use payday loans inappropriately.
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