Are Payday Loans Ever a Good Idea?
Payday loans are often demonized for being high-interest loans that can end up doing more harm than good. By and large, this can easily turn out to be true. Payday loans not only have high interest rates, but they also have high penalties for people who are unable to repay them on time. They are high-risk loans offered by companies that make money off of folks who can’t pay them back as planned.
So what’s the point of payday loans? If the rates and penalty fees are that bad, why even take the risk?
Payday loans do have some advantages. First of all, they’re insanely quick. You can often get a payday loan in minutes without any kind of notice. If you have a sudden financial emergency and it’s not quite payday, then these loans can help get you over the hump until you’ve got money back in your bank account. Second, payday loans are available to anyone, even to people with bad credit. People who can’t get help from regular banks can often get help from payday loan companies, although financial regulations over the past several years have made these loans somewhat more restrictive than they were in the past.
Payday loans are good as a last resort when having money is absolutely necessary. They’re sometimes useful in big moments when a significant chunk of cash is needed. Some people use these loans to pay for rent, medical bills or car repair costs. What you should never do is take a payday loan to make an advance purchase on plane tickets, sports tickets, new electronics or other luxury goods and services.
If you’re going to take out a payday loan, be absolutely sure to read all the terms and conditions first. Be aware of interest rates, penalty fees and all other charges that will be assessed. Payday loans are not cheap. In the right circumstances, though, they can be helpful.