When You Should Consider a Payday Loan

Payday loans are, in many ways, some of the easiest loans you can take out. That’s what makes them so tempting. As long as you’re getting a regular paycheck you can usually find a lender, even if your credit is bad and even if you don’t have any collateral. You should be careful about succumbing to the temptation to turn to one of these loans for the wrong reasons, however.

Never Take Out a Payday Loan to Buy Non-Essential Items

The best Payday loans are meant and used for emergencies. A great new sale doesn’t qualify, nor does a dinner out or a nifty new gadget. Some people have even been tempted to take out payday loans to replace broken items or objects that aren’t strictly necessary. When you take out a payday loan you are directly reducing the amount of your next paycheck both by the amount of the loan and by the amount of the interest, which can be considerable at 425%. If you can’t afford the non-essential item before you take out the loan you’ll be even less able to afford it once it’s time to repay your loan!

Never Take Out a Payday Loan to Supplement Your Income

Some people have grown accustomed to living beyond their means. Payday loans are a very dangerous way to try to “extend” your income. Find ways to make your dollar stretch until you’ve got enough money left over at the end of the month. Even if you take out a new payday loan every two weeks you’re still losing money. You’re still failing to save for emergencies. The fundamental issues that have caused you to feel like you need to increase your income aren’t going away, and sooner or later you’re going to be unable to meet your loan, your fundamental obligations, or both. If you find yourself contemplating a payday loan to meet routine costs then there’s something fundamentally wrong with your family budget that really needs to be addressed. Try to come up with the cash in another way and look for ways to either make more money or cut expenses.

Never Take Out a Payday Loan because a Debt Collector Told You To

Debt collectors are trained to use every psychological trick in the book to make you feel as urgent as possible about that delinquent doctor’s bill, credit card bill, or overdue library book balance. They will often pressure people to get payday loans so they can pay their debts back right away. Debt collectors will often give out bad advice which suggests that you take multiple payday loans, making each one a little smaller than before, to handle repaying your payday loans.

In truth, it makes no sense to take out a debt at 425% interest to pay for a debt that has likely either stopped accruing interest or which never accrued interest in the first place. Instead, work out a payment plan with your creditors if possible, or simply refuse to allow them to intimidate you. If the bill isn’t big enough for them to create a lawsuit and it’s already in collections it can’t do any more damage than it’s already doing. While you do have a moral obligation to repay the debt you shouldn’t do it at the expense of being able to meet your basic needs, and you shouldn’t get yourself into deeper financial trouble to make it happen.

Never take out a Payday Loan if you already have one!

Some people try to survive by taking out multiple payday loans, or by taking out payday loans to pay off other payday loans. This is a deadly cycle of debt that will eventually destroy you! You are essentially obligating your small paycheck twice over if you do this, and both companies will want their money while you still need the same amount of money to pay your bills every month.

In some states this practice is actually illegal. Many applications specifically ask whether or not you have taken out any other payday loans. If you lie about this to get money you are committing fraud, which could send you to jail even if taking out multiple payday loans isn’t illegal in your state.

There’s really only one good reason for taking out a payday loan.

Payday loans are good options for emergencies. A car problem that would keep you from getting to work if it’s not handled fast might be a good example. Obtaining vital medicines for a member of your family who is sick is another example of a “can’t wait” situation. If you don’t have any savings and you have a clear, specific, and immediate emergency need that you could not have foreseen the payday loan allows you to handle the problem. In the future, however, you will want to do everything you can to ensure that you have some sort of emergency savings so that payday loans won’t become a long-term financial strategy.



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  • Cathy Brown says:

    I really like the explanation you gave on why we should and should not get a payday loan. You can get into a really big mess when applying for payday. You have to make sure you are able to pay it back each payday and still have money to cover current expenses.

  • Sandra Gill says:

    U r rite… 🙂

  • Jeffery Neeley says:

    I get all these email saying I’ve been pre-approved but when I go apply and fill out the application then they say we can’t help you at this time but sends me to another site why can’t I get a real loan I’m trying to rebuild my credit but that seems impossible to do

Payday Consumer Notice:


The APR of a payday loan varies in each state and depends on the lender, the advance amount, fees and terms of the transaction. The APR in our network of lenders can range from 265.36% to more than 700% on 14 day terms.

Implications of non-payment

Implications of non-payment vary from lender to lender and by state regulations. If you are unable to repay your loan you may have one or all of the consequences listed below depending upon the terms of your lender. Fees may include but are not limited to: insufficient fund fees, administrative fees, late fees, non-payment fees, court costs and legal fees.

Collection Practices, Credit Score Impact

Payday Loans are due and payable in full in one payment at the end of the loan term, unless the Lender offers renewals or other repayment options. Make sure to review the terms and conditions of your lender if you fail to pay on time.

  • Late payments of loans may result in additional fees or collection activities, or both. Each Lender has their own terms and conditions, please review their policies for further information.
  • Non-payment of credit could result in collection activities and your account could be turned over to a collection agency. Each Lender has their own terms and conditions, please review their policies for further information.
  • Failure to pay your loan on time could result in your lender reporting the delinquency to a credit reporting agency. This could result in the lowering of your credit score which could make borrowing more expensive in the future.

Renewal Policy

Renewal policies vary not only by lender but also by state regulations. Every Lender has their own renewal policy, which may differ from Lender to Lender. Renewal fees vary by lender. Please review your state regulations and you lender's renewal policy, terms and conditions.