A payday loan is a loan usually lent out for a short duration under 2 weeks. The average payday loan is for 8 days and the average payday percentage is around 15%. As per the statistics, 90% of the revenues that come to the payday loan lenders are from those who get up to 5 loans every year. There are many payday stores, in fact more than the number of McDonalds in the country. However, payday loans are apt for some situations and you need to tread the line carefully. In a payday loan, the lender gets a post dated check from the borrower, so that the lender can withdraw money from the borrower’s account after the stipulated period of time.
Mid Month Crisis
If you have a steady stream of income at the end of every month, but fell short of money in the middle of the month, payday loan is one of the options to consider. If your credit card has maxed out and you fail to convince your boss for a cash advance, then payday loan can save the day for you. Since you have an assured income at the end of the month, you don’t have to worry about the debt flipping over to add excessive interest. These emergencies could be medical costs, children’ education related costs or some big purchases you had to make to get a good discount deal.
If you are a businessman
Sometimes the borrowers of payday loans could pay an APR of 390 percent. At a monthly level this is a smaller number and there are many businessmen who make much more than that with the loan amount. If it is the time of the month when liquidity is most important, payday loans could be a good option. Businessmen could go for a higher interest loan to ensure they have sufficient money for the raw goods or other necessities which will contribute to the eventual profit yield.
If you are between jobs and your final settlement is delayed
If you are between jobs, it would be very hard for you to get a reasonable credit card or even a personal loan. However, the final settlement of the previous job always takes time. If this final clearance or settlement is delayed, payday loan is a good option as you are assured that you will have a monthly income soon. If you already have your new job, your 2 week payday loan might be a better option that breaking your deposits or asking from friends and parents.
The Big Sale
Every now and then something you need is on sale but you don’t have sufficient funds to go for the transaction. If a payday loan costs less than what you save through the deal, then it is a very good option for a week or two, till you get your salary. The same is the case when you are buying a gadget or car and the models are fast selling out. You might not really be able to wait till the end of the month.