When dealing with the thought of payday loans it tends to be a tricky topic.  There are some that feel they are the saviors of the poor broke masses but then there are many more who would like to turn them into a scape goat for all the financial troubles in the world.  This article is going to discuss taking a payday loan from a good or bad thing and showing you it is a tool and how to use this tool correctly.

Payday loans (also sometimes called the ‘same day loans’) works basically like this.  You go to the company whether it is online of in a physical location and apply, provide the company with the paperwork they need and then sign the paperwork saying you will repay the money on your payday and finally they give you the money.  On your next payday you are expected to return the money borrowed plus the fees of borrowing it.  These loans are pretty simple to apply for, yes?  But therein lays a concern mainly the amount you borrow and when you choose to borrow.  Let’s look at these two areas and see how they can make the use of these loans right or wrong.

Same Day Loans

The right way to use a same day loan is really not too hard to figure out.  It is when you are in a situation where you find that the cost of not paying your bills on time would cause a greater fee than the fees for getting the cash early and paying a small fee back to the payday loan company.

For example: let’s say that the timing of your phone bill and your paycheck is off. So if you wait until payday you’ll have to pay a reinstallation fee, as well as 2 or 3 late payments on other bills that you owe. Let’s say these total fees amount to $75 extra that you’ll have to spend.

In this kind of a situation where if you could get a quick payday loan to cover the bills, avoid the late payments and/or the overdraft of bounced check fees, and then pay less than a $75 fee it might be worth getting a payday loan for it. Of course the other thing to watch out for is taking out a bigger loan than you need, this can cause more issues than necessary also.

Now here is another area a lot of people get into trouble with payday loans that is dangerous for your credit score: trying to use them similar to a credit card or another form of long term credit. Payday loans help because you get the cash fast, but many forget you also have to pay it back fast. So if all you’re looking to do is get that new big screen TV you want, don’t do it with this type of loan! Get financing from the store if you absolutely have to, but don’t use a payday loan.

This really is where people get into trouble with these loans. They don’t have to get something dealt with right away, but they really want it now not later. So instead of using some basic discipline and waiting until payday they go get a loan and then forget about that loan. This causes them to pay extra fees they could have avoided and get nailed by the payday loan company.

Just keep in mind payday loans can be a good option in those rare, certain situations, but make sure you never take out more than you’re going to get in your paycheck and preferably much less. Don’t use them for wants or desires, but mainly for the purpose of covering bills that would cost you more if you didn’t pay them off right away.

This is a Guest Post

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