Perhaps you have not come across the expression pay day loan before. These types of loans are also sometimes called instant loans or cash advances. If the idea is alien to you, then all you really need to know is that they are short-term loans which are designed to help out in a financial emergency and tide you over until you get paid. They should not be used as a long term financing option, such as to help fund the purchase of a new car or some other large item, because the interest and charges taken over an extended period can be prohibitively expensive.
There are lots of payday loan lenders around – in fact some estimates suggest that there may be as many as 10,000 - but it can often be difficult identifying the good providers such as firms like BlueSkyLoans from the rogues. In short, if you take out a payday loan and are satisfied with the service you have received, then it pays to stick with that same company should you need help again. When you are trying to decide which firm of lenders to use, exercise common sense. Do your homework in the same way you would before undertaking any other sizeable commitment. If something appears to be too good to be true, the chances are that it is! If a payday lender is offering things like no credit checks or instant or guaranteed approval, just make sure that the downside of their offering is not sky-high interest rates, even by the standards of payday lenders.
The most important thing to bear in mind when talking about payday loans is that they should be used to give your finances a temporary boost only. This cannot be over-emphasised. Even the most responsible lender will be charging interest at an annual percentage rate of over 1000%, so if you do not pay your loan back at the end of the month and end up deferring payment – known as rolling over the loan – the costs can very quickly mount up, leaving you trapped in a cycle of debt which can be extremely difficult to extricate yourself from.
If you use them properly – in the way they are intended – then payday loans can be an invaluable budgeting aid, helping you cope if you are hit with an unexpected drain on your cash. Just make sure you pay the loan back quickly or you may end up regretting ever applying for one in the first place!