Personal Payday Loans and You

Personal payday loans can be a viable source of fast cash when you need it most. Unfortunately, these loans can lead to your financial downfall if you do not borrow in a responsible manner. As long as you understand the risks and features of this type of loan, you can make an informed decision without fear of negative consequences.

Features of Personal Payday Loans

When you need a relatively small amount of money to get you through until your next paycheck, personal payday loans can seem like the best options. Unlike a traditional bank loan, payday loans require very little documentation from you and are fast to close. In most cases, you can walk into a payday loan company with your most recent paystub and walk out with your cash as soon as the lender verifies you have an open checking account.

Personal payday loans make it easy to repay your debt. Rather than assigning you monthly payments and giving you a coupon book, the lender takes care of everything. You write a check for the full amount of the loan plus lending fee and the lender deposits your check on your next payday, paying off your loan in full. You can also pay with cash on your due date or take out a new loan.

Risks of Personal Payday Loans

Rather than using personal payday loans to bridge the financial gap during an emergency, some borrowers fall into the trap of taking out multiple payday loans. Instead of letting the lender cash their check, they pay the outstanding lending fee and take out a new loan for the same amount. When you do this payday after payday, the fees can add up to what would be an astronomical interest rate.

Smart Use of Personal Payday Loans

Although most payday lenders won’t limit the number of personal payday loans you can take out over an extended period, using this loan as a last resort is a wise policy. Before you visit your lender, consider how you’ll use the money and how long it will take you to repay the loan. If you know it will take months to repay, consider applying for a traditional bank loan or line of credit instead. The interest rate will be lower and most financial institutions report to the credit bureaus after as little as six months.

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