Curing Our Financial Burdens
Sometimes difficult financial situations arise that take our money and leave us only with headaches. These occur when we have saved enough money for a certain bill we know will be coming, then something unexpected happens, and we end with another mandatory expense we could not have predicted.
These situations are frustrating because we feel as though we are being financially smart by having enough in the bank the whole month for that one bill. The problem is we do not have enough and we have to figure out how to get the money so we can overcome this trying situation.
It is important then to learn what payday loans are and how they can help us with these unpredictable financial struggles. Payday loans exist because these situations exist and financial institutions do not offer short term loans to help people out of them.
Payday lenders saw a need for a quick cash advance system in which consumers could get their next paycheck now for a small fee. If someone has a guaranteed income and something comes up they did not foresee then they can simply go to any payday lender and borrow however much they need for a short time period and pay it off when their next paycheck arrives.
This all seems great but if it does not actually save you any money then it would be useless. It is important then to figure out if borrowing from a payday lender would actually save you money.
Consider a situation where you are $100 short and you have to make up the money to pay off two debts. In this situation, like paying rent and a car repair fee, you have to pay both off right now. Realizing this you try to figure out what your different options are and what will benefit you the most.
One thing you consider is writing out a check for both bills in full. If you do this you are writing a check for money you do not have but hope they will be slow in depositing your check.
If they wait a week then you can run to the bank as soon as you get your next paycheck and make sure the money is in your account. The problem is your check is being issued to businesses or business people who take checks in the day of or the next day after they receive it.
When they take your check in it will be discovered you do not have enough money to pay off what you wrote. The financial institution will then charge you an overdraft fee which is usually $25 to $50. This means you will be charged this money and still have to make up the $100.
It is at this time when you should learn what a payday loan would do for you. On a $100 the average fee is just over a dollar a day.
That means at the end of two weeks when your loan expires you will owe $115 to the lender. If you only need the money for one week you can shorten the loan and owe just $107.50 back.
You then see this option saves you the most money. Loans always have an annual percentage rate, or APR.
This number tells you how much you would pay in interest on the loan if it were to last a year. Because payday loans only last a short while they have a lot higher APRs than long term loans.
Long term loans can afford lower APRs because they are able to accrue interest over a lengthy time period. Short term loans, in contrast, have to stay in business somehow and thus the only way for them to be profitable is to have high APRs which translate into these reasonable fees.
Because payday lenders want to help you out by offering payday loans they make the process of taking them out very easy. Make sure you have proof of income, like a pay stub, a valid photo ID issued from the state or federal government, and a checking account in your name.
You can walk into any payday lender and upon showing him you have these things they will discuss with you how much you need to borrow and how much the fee will be. You then write out a check for how much you will owe them when the loan ends and they hand you your cash.
The check you write for them is dated for the day the loan expires allowing the lender to take your check into the bank at that time and get his money back. Because of this, it is important you make sure there is enough money in the bank at that time so you will not be charged any more fees.
By acting responsibly you can save a lot of money using payday loans.
About the author
Jerry Daniels is a very trusted resource in the financial industry and has written many articles relating to consumer services and Personal Loans Online. Contact Info: Jerry Daniels jerrydaniels08@gmail.com http://www.PersonalLoansZone.comTags: cash advance, Payday Loans