When Payday Loans Online Make Financial Sense

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When Payday Loans Online Make Financial Sense

It should be your last port of call, but there are actually some occasions when a payday loan makes sense, discover when and why...

AuthorReviewed by ✅
Stephen A. Martin
Consumer Finance Contributor, We Heart

Stephen A. Martin is a consumer finance expert with extensive experience in personal finance, budgeting, and wealth management. He contributes to lifestyle publications, offering practical advice on managing money, saving, and financial planning. Stephen’s approachable style makes complex financial topics easy to understand, helping readers make informed decisions to improve their financial wellbeing.
James Davidson
Editor in Chief/Founder, We Heart

James Davidson is the Founder and Editor-in-Chief of We Heart, a leading lifestyle platform he has helmed for nearly 17 years. He has collaborated with top brands such as Audi, Veuve Clicquot, Samsung, and Google. Under his guidance, We Heart has grown from a niche magazine to a widely respected authority on all areas of lifestyle. With a background as a freelance travel writer, James brings a wealth of experience to his editorial work.
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There is a lot of discussion going on regarding payday loans and whether they are the best way to resolve short term financial issues. It is understandable that some people are apprehensive about taking on another loan when they are already in some financial trouble. But the truth is that, in some circumstances, taking on a payday loan is preferable to the alternative. Below is an explanation of some of those situations.

When Payday Loans Online Make Financial Sense

What is a Payday Loan? Before looking at the different circumstances, it is important to clarify the facts regarding payday loans. The payday loans online are short term loans that you can obtain in amounts ranging from one hundred to a few thousand dollars. If you choose to get paydayloans online, you will not have to go through a credit check, but you will have to provide details about your job and bank account.

Payday lenders do not require you to have a credit check, as they want these loans to remain viable for people who are in a financial bind. But you have to take on the higher interest rate that comes as a result of those lack of checks. Since the lender has no idea about your creditworthiness, they are taking on a greater risk, which is why some payday loans have 250% or 350% APR.

However, the high APR should not scare you if you are not planning on keeping the payday loan for very long. Those who are in a position to pay back the loan within two or three weeks will not have to pay more than $15 to $30 on the average payday loan they take out.

It is only when you are taking months to pay back a payday loan that you could be looking at hundreds of dollars in interest expenses for a single loan. It is why you must ensure that you are in a position to quickly pay back a payday loan before you take one out.

When Payday Loans Online Make Financial Sense

Using a Payday Loan to Fix Your Vehicle: One of the most common reasons why people take out payday loans is because they are involved in a car accident. If you had an average insurance policy, and you were at fault in the accident, the damage to your vehicle is not covered by your policy. Policies that lack collision and comprehensive coverage will not cover damages to your vehicle from an accident where you were at fault.

When Payday Loans Online Make Financial Sense

That means you have to come up with the money for the repairs immediately. If you do not have significant savings, it means you do not have access to your car for days or weeks. A payday loan can help you in these circumstances. Rather than having to wait around for your next paycheck to afford the repairs, you can get a payday loan in your bank account within 24 to 48 hours. Then you can pay for the repairs and be back at work without missing more than a couple of days.

In these circumstances, the cost of the payday loan is far lower than missing three or four extra days of work. By making your shifts on those days, you earn the money to pay back the loan and meet your regular expenses in the coming weeks.

Delay in Your Paycheck: While a delayed paycheck is not common, it can happen in some circumstances. If you start a new job and enable direct deposit, there can be a two week delay for your first paycheck to come through.

Perhaps there is an issue with your employers’ accounts, and they had to delay your paycheck for one or two weeks. That is not a common occurrence, but it is very problematic when it happens. A payday loan can help you in these circumstances. You know that you are getting paid soon, and you know the specific amount. The payday loan tides you over until those days, but you are not taking a significant risk. You know that you can pay back the loan in the coming weeks, and that means a minor dollar charge for interest on the loan.

Find a Reputable Lender: When it comes to payday loans or any other loan, you must ensure that you are finding a reputable lender. Do some research on the company to understand how they operate, and whether any other users had bad experiences when taking out loans. Then you can determine whether you are safe in your transaction.

At the end of the day, payday loans are a good way for people who have no or poor credit to get the money they need. Payday loans come through in one or two days, giving you the quick cash injection that can be immensely helpful.