Do payday loans really offer a solution?

Perhaps if you asked various people from different sectors, you would get varying answers as well. The answer would really depend on the person’s perspective and his take on many things in life. If you were to ask me this question, though, I would answer “It depends.”

It depends on what, you may ask. Well, it depends on many different factors. In many cases, payday loans can offer the best solution available. In others, they may not be the most appropriate choice. Here are some questions to ask yourself in order to determine if taking out a payday loan is the best option for you.

How urgent is your need?
Do you absolutely have to have that money within the next few days or can your need wait till the next payday at least? Be totally honest with yourself. Sometimes, when we want something so badly, it is very easy to fool ourselves into thinking that whatever it is we want simply cannot wait. I have the perfect illustration to this. My friend was going on a business trip and he wanted an iPod nano to bring along. He didn’t have one. He wanted it so badly that he ended up actually believing that he needed it in order to have a pleasant trip. I can listen to music on the plane. I wouldn’t be bored out of my wits. I could be more productive if I had something to listen to – and so on. Obviously, he could have lived without the nano. He didn’t need to borrow money just for that.

How much money do you need?
Let’s take a look at that illustration again. The iPod nano could cost anywhere from $100 to $200, depending on where you buy one and whether it is used or new. That’s not too much, if you think about it. A payday loan could indeed cover this expense. Yet what about if your need ranges from $1000 to $3000? Will a payday loan be able to cover this expense? Probably not. Payday loans are meant for short term temporary cash shortages. They are not meant to take care of really major expenses. If you need a huge sum of money, then a payday loan may not be your best bet.

Are you expecting money to come in soon?
More so, will the money that you are expecting be enough to cover your daily expenses PLUS the payment needed for the payday loan? I think this is one of the biggest mistakes of borrowers. They think that since they have money coming in anyway, there will be no problem at all. However, sometimes, they overlook that fact that they have other regular expenses to deal with first. Money for food, for transportation, for the bills – these things are part and parcel of most anyone’s budget. They usually cannot be done away with. Now, if you are quite certain that your next pay cheque or that the money you are expecting (whatever the source may be) will be enough to take care of your day to day expenses AND pay off the payday loan, then you have nothing to be concerned about. The important thing is for you to be able to project your expenses and then see if you can afford the payday loan.

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