Payday Loans: An Option Better Kept For The “Rainy Days”

A stable job and a decent pay does not always guarantee a person that he is indeed free from the exigencies of life. Occasionally, there are times when one’s budget gets constrained to such a point that to “borrow money” is the sole answer to his plight. In such cases, employees could always recourse to payday loans. Basically, this is a loan where lenders take the payment from the borrower’s paycheque on his next payday. What draws more people to avail such loans is that lenders often do not take into consideration the borrower’s credit rating.

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Most companies that offer payday loans also require fewer documents compared to house loans, car loans, etc. Applications for payday loans are made more accessible since the forms could now be completed online, documents could be faxed, and the loan could then be transferred to the borrower’s bank account. Payment is also made more convenient since it could be electronically withdrawn from the same account on the borrower’s next payday.

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With all the comforts a payday loan could offer, one might be tempted to think that this could be used routinely or whenever the need arises. On the flip side, interest rates for payday loans are deliberately higher compared to other loans. Extending the deadline of payment only incurs more fees and plunges one further into debt. Finally, frequently acquiring payday loans could potentially exhaust one’s allocated budget and overshadow other priorities. While payday loans advocate a quick fix, it is best kept for a rainy day.

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