Over the past few years, we watched as the economy began its spiral decline which has left the nation under immense financial strain. The employment rate is down, the poverty line has reached an all time low in many states and the debt level has continued to climb. With many of us who are lucky enough to be in work, the increased cost of living and lack of similar increase to wages has meant for many, that our monthly pay no longer lasts the month.
Many people in this or similar situations, are now turning to short term loan options to help them to get their finances back on track, and there are many options available for short term , pay day financing. These loans are available for essential use only, and there are many reputable companies in various countries offering this financing, for example Payday loans in Canada from Dollars Direct, and similar in America and the UK . As with all types of borrowing, there are points that you need to consider before undertaking a pay day loan, the main thing to remember is that this form of loan is specifically designed to help you to alleviate your finances over the time frame of weeks and not months.
So to help you find the right pay day loan for you, please consider the following ideas.
1. Know what your pay day loan is for
Pay Day loans are a great solution for when you have a lull in your finances in between your employers pay; this may be caused by an unexpected bill or a financial emergency. If this sounds like something you are experiencing then a loan of this sort may be a viable option for you. Remember though to never borrow more than you can afford to pay back.
In general, these loans have high interest rates for a good reason, they are designed for you to borrow $200 for example over a period of time like 2 weeks. This way you will only pay back minimal interest upon your initial credit – perfect for any unexpected occurrence mid month. However if you are experiencing issues on a regular monthly basis then be aware that if you can’t meet the full payment of your loan, you could end up paying double or triple the amount you borrowed. Being aware of why you need the loan will help to eliminate this issue and make sure that you don’t get into any other debt.
2. Can you afford to repay the interest?
This form of loan has in general, the highest rates of interest available so you have to be aware of what credit you will gain and how much you will be paying back. This is the best way to make sure you know exactly where you will stand financially over the next few weeks.
The main point to be aware of here is that there are currently no guidelines on the interest rates that are offered with this form of loan, and they can change from lender to lender and even across different states. With this in mind it is imperative that you do your research to find out what is being offered and what the payment dates are from a variety of companies.
3. Only use one lender at a time
It may seem like a strange statement to make, but as pay day loans are designed for periods of financial emergencies etc, they are not to be taken on a whim and you will only want to have 1 in any given period of time! Along with the effects of having multiple loans to pay back, it is also illegal in some states to have more than one loan against any give pay check. It also needs to be mentioned that you should only ever use accredited companies and this should be researched before you sign any contract.
The financial burden of having multiple lenders at the same time is that you may end up with payments that exceed your pay which will leave you with increased interest on your repayments and may cause further credit history issues in the future!
Are they right for you?
Pay Day loans are great in terms of emergency and are there for this reason, many people use them every day to help and have had much success with this. You just need to remember that it is your responsibility to make sure that you can make your payments and only borrow what you actually need!
Helen Smith is a finance writer with over 5 years experience within the sector. In her spare time she loves to research finance tips to help us in 2013.