Payday loans have received mixed reviews based on the experiences of those who’ve used them. Whether they’re seen as bad or good isn’t quite the point—it’s whether they can be useful or not that matters most. Suffering from a consistent cash shortfall can be just as stressful, if not more so, than a sudden need for extra cash.
And payday loans can provide relief for both of those problems.
People may need to borrow money for all manner of reasons; however, there are at least 10 common reasons why someone might consider a payday loan or cash advance.
1. Because you couldn’t get a bank loan
Financial hardship can happen to anyone, and sometimes people will seek small bank loans or mortgage loan modifications to make their mortgage or rent payments. Mortgage loan modifications aren’t always easy to get, and you may waste months trying to finalize or appeal your lender’s decision. In the meantime, payday loans could help keep you current on your mortgage or rent.
2. To pay for an emergency medical or auto expense
Incidental expenses are those incurred because of medical needs, auto repair, car accidents, and anything else that wasn’t planned. When these events happen, they often impose financial burdens on us, necessitating large out-of-pocket costs—some of which we may not be prepared to pay.
A payday loan can assist with these bills, giving you the opportunity to make the emergency care, service, or purchase when you need it so long as you can pay the loan back during the determined period of repayment.
3. To loan emergency money to a friend or family member
Sometimes it’s someone you know who has found himself or herself in a predicament. For whatever reason, they may not have money of their own to use or be able to apply for the payday loan themselves. In this case, you might be able to take one out, help them, and take care of the repayment afterwards.
4. To cover everyday bills like groceries, rent, and utilities
According to studies, 69% of the average borrower of payday loans is using it to cover recurring expenses. These would include utility bills, groceries, rent, or credit card payments. These borrowers tend to be experiencing a consistent cash shortfall and payday loans can help them stay current without cutting back on to many other extraneous expenses.
5. To pay off credit card debt
Credit card companies and other loan lenders may resort to multiple phone calls a day or threatening letters if they’re intent on collecting payment/debts. In this case, using a payday loan to get collectors off your back may be beneficial. Maxing out a credit card may be another reason.
A payday loan can ease some of the damage if you’ve already exhausted your other cards trying to keep up with bills and existing payments. Using one to make lower credit card debt or to cover a charge your card currently can’t are two reasons that a payday loan may be beneficial.
6. Because it doesn’t require a credit check
If you have bad credit or no credit at all, payday loans are generally simple to get in either scenario. Not requiring a credit check is what makes these kinds of loans so desirable—and widely used. And without a look into your credit history, time between application and approval is much shorter than with traditional loans that consider your credit score.
7. To avoid borrowing money from friends and family
Borrowing money can be a matter of pride, and some people may have a difficult time asking those closest to them for help. In these instances, having access to a payday loan may help an individual “safe face” and take care of the issue themselves without having to involve anyone else.
8. To cover the cost of a debt or bill that could cost much more if missed
Depending on agreements with other loan lenders, missing a payment could result in large penalties or the repossession (loss) of a good, such as a car or major appliance. In this case, the interest paid on a payday loan may be well worth borrowing money to make a payment if missing it would cause you to lose not only the good, but also all money paid on it to date.
9. To make a time-sensitive purchase or repayment
Something suddenly comes out and you just have to have it—what do you do? Saving up would take too long and by the time you do, you might miss your chance to have whatever it is that’s gotten you so excited. Using your credit card, or a payday loan, is useful in this situation.
10. If you’re financially well off but need the extra cash, paying it back will be easy
In some cases, it may be simpler to borrow money than spend what you have, even if you might happen to have enough to cover the amount already. Payday loans, if paid back immediately, may be more cost effective than making the purchase on a credit card depending on your interest rates.
No matter where you stand on the debate about payday loans, at least now you have 10 reasons to consider one.