The Challenges Of Managing Payday Loans
Managing any types of loans or financing can be quite tricky for some people. Knowing when to pay bills, when things are due, what fees are involved, and other financial decisions are often too much for some to handle, and they wind up falling behind and not sure how to get caught up.
These same people are often getting cash advance loans, also known as payday loans, and have a hard time managing them, making their financial situation worse, instead of better. The following are the challenges of managing payday loans and some things that people can do to manage them better.
There are several reasons that people end up getting a cash advance payday loan. Typically, these reasons include car repairs, unexpected emergencies, short on cash for bills, avoiding late fees, and other short term financial matters. The following are various reasons that people need to get a payday loan.
Car Repairs:
Vehicles break down all the time, and these expenses are often large and not planned. This means that people rarely have the money put aside for these expenses, which would be a good reason to get a cash advance loan.
Medical Bills:
People get sick, and often that means more expenses. People don’t usually plan to get sick, so it often throws a budget out of whack when this occurs.
Paying Bills on Time:
Credit score and history is nothing to mess with, and people want to keep the best scores possible, so sometimes bills are due, and the money isn’t there to pay for them. Getting a cash loan to pay bills on time is an excellent way to avoid late fees and keep personal credit intact.
Family Needs:
There are times when it just comes down to a person needing cash. Everyone experiences a period in their life from time to time when they are short on money and getting a cash loan is meant for those times.
There are also some benefits to getting a cash advance loan, making them appealing to some people. The following are several reasons payday loans are popular and the advantages of getting them.
No Credit Check:
Payday loans are not secured using personal credit, but rather a person’s banking account. This means that an individual’s credit history is not checked, and the loan will not show up on the credit history report or affect a person’s credit score at all.
No waiting in line or a long time for approval–Payday loans are approved on the same day and can be done online without any hassle of waiting in line, or talk to a person for approval. The loans are approved, and the cash is deposited directly in the bank account provided within a short period.
No Driving and No Phone Calls:
Getting the loan online means no additional expenses or time involved in driving to place or waiting on the phone to talk to a person.
Seeing how easy it is to get a payday loan and the benefits of getting one, it’s easy to see why so many people decide to get one. The following are the challenges in managing payday loans.
No Installment Payments:
Unlike traditional loans, payday loans have to be paid back in full by the next payday. This means that people should only take what they can pay back on time and not get more than they can handle. People often get more money than they should, which makes it hard to pay back on time, and means that they have to refinance the loan again, which costs them more money.
Short-Term Period:
Knowing there are no installment payments for these loans, a person has to be aware of the short-term payment plan for these loans and know what day they will have the money provided and what day they have to pay it back.
A payday cycle is only two weeks in most cases, and people get the loans expecting to have the money when they need to pay it back, but the short-term period may not be enough time to get all the funds to pay the loan back.
Refinance Fees:
Like with other loans, there are some finance fees with the loans, but it’s just a one-time fee unless the loan needs to be refinanced. When the payday loan gets refinanced, the fee is tacked on again, so every time a person refinances the loan, they pay the fee again.
Doing this multiple times makes the loan fees more than expected, making it harder to manage. Be aware of the costs and don’t take more than can be paid back to avoid paying more refinance fees.
In the end, using payday loans responsibly is the best way to manage them and knowing how does cash advance loans work and only using what can be paid back on time is the best way to not get in over the head and to manage payday loans correctly.