A payday loan is a short-term loan that is designed to get you through until payday. The borrower must have a checking account, a job and be 18 years of age. Typical borrowing limits range anywhere from $100 to $600. Under terms of the agreement the loan is then due as of the borrower’s next paycheck.
Payday loans are a very simple concept, but it is one that has been abused by many providers and consumers. Many people have not used the loans wisely and have found themselves stuck in an expensive circle of loan extensions and costly fees. This has led many people to believe that payday loans are costly cash. However, they do not have to be. They do not have to be costly if they are used wisely. They also offer an option to consumers who do not otherwise qualify or have the time to apply for a typical bank loan.
A payday loan is termed just that because they are designed to get you through until your next payday. They are not designed to be long-term loans and should not be used as such. If these loans are used in a long-term manner, you end up paying short-term loan fees over a long period of time. That is a quick way to turn a payday loan into costly cash.
A payday loan can be used in a responsible manner. If you find yourself in a jam and you need emergency funds to avoid your credit card bill being late or your mortgage bill being late, then a payday loan is a viable option. You can take out the loan to help you pay those bills and then pay the loan back plus the fee when it comes due two weeks later on payday. This allows you to make it until your next paycheck without borrowing from a bank or risking late fees or NSF fees. By using the payday loan as a temporary solution, you are doing so responsibly and you are actually saving yourself money in the long run.
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