Some people who take out payday loans can find themselves stuck in a cycle of borrowing often and losing money on fees. However, a payday loan that is taken out for the right reasons and repaid properly can help you get out of a bad financial situation. These tips will help you take out a payday loan the smart way, without losing a lot of money on fees.
Use Your Payday Loan to Avoid A Bigger Fee
Like many loans, payday loans have associated fees that must be paid. The best way to use a payday loan is to use it to pay another bill with a higher associated fee. For example, suppose you need money to pay your credit card bill, and the late fee for your credit card is $30. Taking out a loan to pay your credit card is a smart choice if the payday loan's associated fee is less than $30. If your payday loan's fee is only $10, then you'll save $20 by borrowing the money to pay your credit card.
Have a Plan to Pay Back Your Loan
Some people who take out payday loans find themselves borrowing repeatedly and losing money every month as a result. Before you take out a payday loan, formulate a plan to pay back your loan the following month. Find out in advance what the fee will be to borrow your payday loan, then formulate a budget. Predict your upcoming expenses for the month, and allocate a certain amount for each type of expense. In the budget, set aside the amount you'll need to pay back your loan next month. Budgeting in this way may take some creative problem solving. Consider riding with a friend to work, selling something of value or working overtime hours at your work.
Call several payday loan companies to compare prices and repayment schedules. Questions to ask when calling payday loan businesses include:
- What is your borrowing fee?
- When is the money due?
- What is the minimum and maximum amount that a person is allowed to borrow?
- Is there a credit check required to borrow?
Knowing the answers to these questions can help you pick the payday loan company that offers the best deal and best suits your needs. For more information about getting a payday loan that's right for you, and for more information about borrowing money for your payday loan the smart way, talk to a reputable payday loan business in your area.