Years ago, payday loans were the primary way of borrowing money, during a time when there weren't nearly as many loan options as there are now. And especially with how many people make liberal use of credit cards nowadays, it's certainly tempting to think that payday loans have fallen out of favour. But have they, really? Or are people still taking out payday loans?
The answer is that yes, payday loans are still popular among borrowers, so let's take a look at why that is.
What Are Payday Loans?
First thing's first - let's define payday loans. Like the name says, payday loans are traditionally loans that are given out until "payday" so for roughly one a month or a fortnight. A payday loan was meant to be something to tide one over in an emergency, on short notice, until they got paid and were able to return the money.
Now, however, the definition of a payday loan has changed with the needs of the borrowers, and the loan terms are significantly more flexible. You can get a "payday loan" for 1, 3, or 6 months, for example, depending on the amount you wish to borrow.
One thing to remember, however, is that payday loans come with a higher interest rate, because of the lack of security. While payday loans offer the significant advantage of not requiring collateral, the longer it takes to repay the loan, the more you end up paying in interest, in order to secure the loan.
When Can You Use A Payday Loan?
As mentioned earlier, payday loans are typically used in cases of emergency, or when one needs cash very quickly, on short notice. Here are some of the expenses that a payday loan can cover:
- A car repair
Unfortunately, we can't predict when the car will finally break down and refuse to start. What we can predict, however, is that it needs to be taken to a garage, and that the bill will be significant. You can't afford to not have a vehicle, so a quick loan can cover this necessary, if unfortunate, expense.
- A medical bill
You don't play fast and loose with matters of health, so when you end up at the doctor's or worse - at the dentist's - the only thing you can do is follow recommendations. Unfortunately, medical equipment or treatment can be expensive, but it's necessary.
- An emergency trip
You never know when something comes up, and if you live far away from your family, anything can be a reason for an emergency trip. Whether it's a death in the family, an illness, or just a loved one that requires your assistance or emotional support, it's important to be able to be there for your friends and family.
- An appliance replacement
We invest in all sorts of appliances, and they're all expensive, and sadly, they sometimes meet their maker. But we've grown so accustomed to having them and they're necessary - especially something like refrigerator - so we have no alternative but to pay to replace them, so you can use a payday loan for that.
Should You Get A Payday Loan?
Now that you know a little bit about instant decision loans, are they a viable option for your needs, and should you get one, or are you better off looking for a different financing solution?
You SHOULD get a payday loan IF: You need it as a one-time solution to an unforeseen emergency financial situation that can be covered by the amount you are eligible to borrow. You can afford the instalments and are able to pay the interest charge.
You SHOULDN'T get a payday loan IF: You cannot rely on payday loans as a long-term financing solution. If you are struggling with meeting everyday expenses, then this is not the loan for you, because it's unsustainable long-term, and can get expensive. Instead, you should look into getting a personal loan - secured or unsecured - that offers more convenient and affordable loan terms for your situation.
In conclusion, payday loans are still very much a viable and popular borrowing option for a lot of people in need. What you need to remember is that it's a short-term solution that should hopefully be used as a one-time thing, or at least an infrequent one, because of the significant interest rate that may render this loan prohibitive.