Understanding the Pros and Cons of Payday Loans During a Financial Emergency
Consumers generally turn to loans for payday when they have no other options for credit and need cash quickly. That’s because interest rates are high on these loans since they tend to be riskier for lending companies. Default rates are higher than the norm. Customers also tend to have credit problems indicating they have had a habit of defaulting or making late payments.
Why Choose Payday Loans?
Because of those issues, these individuals find it impossible to borrow money in a traditional way. They don’t qualify for a bank loan or credit union loan. They don’t have credit cards, their cards are maxed out, or their cards have gone to collections. Other options also have higher interest rates, such as getting a vehicle title loan or bringing jewelry to a pawn shop. And, in getting that type of loan, they risk losing the car or the possessions they really want to keep. They know their relatives and friends cannot or will not help.
A Wake-Up Call
When an individual is in this troubled situation, getting a payday loan may be the only viable option when emergency cash is needed. It’s time to understand this is a wake-up call, and the borrower must start getting their personal finances in order. Even payday lenders emphasize that these loans are not long-term solutions to financial problems.
Building credit is important, and having a cash emergency fund is essential to avoid repeated episodes when it feels necessary to get a payday loan. An abundance of helpful articles are available online regarding how to make some extra income every month that can be stashed away for the emergency fund. When that cash is available, an emergency loan for car repairs or a veterinary bill no longer is needed.
Consumers who are in a bit of a financial crisis and have no access to other forms of credit appreciate the services offered by lenders such as MoneyBoat. This type of company offers installment loans in addition to standard payday loans, with the advantage being a longer schedule to pay the money back. This is easier on the borrower.