Especially if you have never borrowed money in a pinch and have no experience with Payday Loans, it can be difficult to determine whether or not your financial situation justifies taking out a payday advance loan.  Also, a first time borrower has probably heard at one time or another some type of negative news report targeting Payday Loans and citing the “debt-cycle” as one of many reasons as to why people should beware of Payday Loans.

With this in mind, I wanted to discuss briefly some things to think about when you are in need of cash and considering a Payday Loan as an option to help out.

A Payday Loan is only meant to be a quick solution to a short-term financial pinch:

You are never advised to look to a Payday Loan to help fix long-term financial problems.  One reason is, that because Payday Loans are easy to procure (even with bad credit) and due to the fact that it is a SHORT term loan, they are more expensive in terms of APR compared to a longer loan because a shorter loan has less time to cover the expenses incurred with giving that loan out (cost of employees, credit check, application fee, business licensing etc..).  In short, because you are taking out a short term loan, the lender has to charge more in order to make up the costs of giving out that loan.  That’s why a Payday Loan ends up being too expensive to help you with a long term financial pinch.

Know your finances as well as possible:

Do your best to figure out how much money you typically (AND currently!) have going in and out.  For example, if you know that your check is $500 each week, and you are short on a few bills that month because of a recent car repair, a payday loan may be cheaper than missing 2 utility payments or possible overdraft’s.  Compare your options to figure out if a Payday Loan can help to avoid other more costly charges until your next payday.

Stick you your plans:

When taking out a Payday Loan, if you plan on paying it back on your next paycheck, do your best to stick to it!  Most problems occur when a borrower chooses not to pay the loan back in it’s entirety, and to “roll” the loan over.  Now, it can be tempting to take another loan instead of paying it back and being tight on money all week, but if that was your original plan…. stick to it!

Remember to explore you options, know your loan terms, and most importantly…. PAY IT BACK!!  Hopefully, these steps will help you to decide if a Payday Loan is right for you, and to avoid the elusive “debt-cycle”.