Payday loans can be a real life saver for most of us without access to other forms of any type of credit. If you’ve ever been in the situation when you needed cash right away and couldn’t get a standard loan from anyone, you know exactly what I’m talking about. Payday loans are intended to accomplish one simple thing. They are there to tide you over until you get your next paycheck when you run into a genuine emergency. Here are some examples of good and bad reasons for taking out a payday loan:
- Taking out a small payday loan to buy food for your kids because your kids need to eat may be a good idea.
- Taking out a payday loan because you’re out of beer is a bad idea.
- Taking out a payday loan to pay for car repairs so you can continue to go to work may be a really good idea.
- Taking out a payday loan so you can get new rims is a bad idea.
You should never take out more of a payday loan than you can afford to pay back with your next paycheck without needing to immediately borrow more money again. Many people get into the trap of borrowing as much as they can, then finding themselves in a bind when they need to pay it back because there’s not enough paycheck left to cover all the week’s expenses. They end up borrowing the money again.
Because some people have gotten themselves in over their heads with getting loan after loan, and because some unethical lenders encourage certain practices, several states have enacted laws governing the industry. These laws range from forcing lenders to disclose the actual annual interest rates to giving borrowers. So if you’re carefully and only take out what you can pay back you won’t have any issues.