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Payday loans often get a bad rep, and in some cases there is good reason. There are bad lenders and scams out there, as well as those that simply do not understand the process well enough to make an informed decision and handle it wisely. The fact is, however, that payday loans can be used to keep finances in order or to keep them from getting any worse than they already are. Financial problems are bound to come up, and a payday loan can mean the difference in a minor bump in the road or a full on cataclysmic financial disaster. Here are some positive things you may not have heard about payday loans.
Though many of you must pay back in one lump sum with your next paycheck, there are some lenders that offer the option of two or three installments. This can be helpful if paying back the loan in a one lump sum could cause more financial turmoil.
A payday advance loan could actually give you a credit boost. If you have poor credit you may not get that chance anywhere else as you are unlikely to be approved for any other type of loan. By taking the payday loan and paying it on time, you will only help your credit score. This is even truer if you get an installment loan, as it will show you are able to make consistent payments on time.
Contrary to popular belief, payday lenders do not just hand out money to anyone, and they do not hand out large amounts. While the eligibility requirements are few, at a minimum a borrower must be of legal age and have a job. Still, loan amounts are based on income, meaning they will not lend you more than what you would make on your next paycheck, or if they do it will be considered an advance on more than one check. Generally loan amounts are a percentage of pay check amount.
If you truly understand how a payday loan works, you can definitely use it to your advantage. Remember you will not be able to get more than you pay with your next paycheck in most cases, but you may need that paycheck to cover regular expenses a well. Consider your options for how to do that, from borrowing from a friend to having a garage sale. Also remember, as great as it can be for your credit if you pay in time, it can be equally bad for your credit if you do not. Take the time to consider your options, and if a payday loan is right for you, it could be a decision that will save you from financial ruin in the long run.