You just see your water supply pipeline in your house burst and streams of water coming out from everywhere. You have cut the water supply for now but you can’t stay on like this for long. Out goes a phone call to the local plumber asking the cost of repair. “It won’t be repaired Sir. It has to be replaced”, he says. What do you do now? The estimate of replacement is over $500. It is the middle of the month and you are having only $150 in your bank account. You have other pending bills for the month. What will you do? How will you arrange this money at such a short notice for something you cannot delay?
Availing payday advance loans during financial woes
The situation above can happen to any of us. It may not be in the same form but can come to us through a broken car or urgent medical bill or something else where you are required to pay immediate cash right in the middle of the month. To douse the financial fire, there is an alternative of taking a Payday loan. This is a short term unsecured loan meant to cover any financial emergency like above and you are required to pay off only by the next paycheck date.
Such loans do come at a cost in the form of a high interest rate. There are many other charges involved in case you are not able to pay it off on time and require a roll over to next month and on-wards.
Before getting into a contract of payday advance loans, it is important to understand the need of the money. Some of the points worth pondering at this stage can be:
- Is the loan being taken for some urgent need or it’s the impulsive shopping or trip you want to do? One should not borrow without an appropriate justification.
- Do not jump to the nearest store and take money. It is very important to compare multiple lenders and do a deep dive into their terms and conditions. A good understanding of such points will help you to ascertain the total outflow of money against the original loan amount.
- Always try to approach your bank or the credit union for a loan. You might just get a good deal.
- Payday loans are unsecured and thus expensive. A good idea can be to dispose of unwanted items in the house for that extra cash.
- Always be aware that interest on payday loan is not tax deductible
These loans do act as a boon in certain situations. Some of the benefits which a payday loan can give can be:
- Payday loans are instant cash which does not come with a precondition. It can be used for any purpose and there is no justification required for the lender to grant it. There are no long discussions or sessions for granting such loan. It is a quick money which can be used for any purpose.
- Such loans are very useful when the time to secure money is of high importance. Because of quick processing, the money can be credited as soon as by the next day.
- Payday loans are best in the situation where a person has credit card issues. People who do not have credit card, payday loan is like an assurance of money supply during contingencies.
- In case of a short term debt, this loan works the best as the entire loan can be paid off by the next pay date.
Online Payday loans has been regulated by the legislation so to save the interest of the borrowers. The legislation has fixed the rate of interest of 2.75% per month which translates to 33% per annum beyond which a lender cannot charge the interest. This effectively makes the payday loan charge at par with the standard bank and hence in actual terms, the high interest rate lending can be considered as prohibited. This works in the interest of the intended borrowers who are safeguarded against any exploitation. In case any borrower sees some institution breaching the norm or gets charged with a high interest, he can go and complain with the Maryland Commissioner of Financial Regulation.