Are Payday Short Term Loans a Good Idea?

by | Jan 22, 2014 | Loans

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A payday loan is a type of loan that you acquire from a financial institute other than a bank. The reason they are called payday short term loans is because you just borrow enough money to survive until your next paycheck and then you pay the money back. Payday loan providers operate on a pretty wide range of different titles. It is also not uncommon for them to take a postdated check as a form of collateral. Most of the time, they are going to charge a fee on their loan which makes the interest rate extremely high. It is not uncommon to see an interest rate as high as 400 percent.

There is nothing wrong with getting payday short term loans; you just need to make sure you need the fine print. You need to be aware of what the interest rate is and what happens if you miss a payment. When you take a payday loan, the best thing you can do for yourself is take one that you are going to be able to pay back when you get paid again. Getting a loan that is just going to put you in more debt is just going to make your problems worse instead of better.

A lot of people wonder whether or not they would even be able to qualify for this kind of loan because they have less than ideal credit. Most payday loan providers really do not care about your credit history. They want someone who has a checking account, someone who has held a job for a while, and someone that has established a place to live. As long as you are 18 and you meet those requirements it is a pretty safe bet that you would qualify for the loan.

The amount of money you qualify for is going to vary depending on your income. The fact that the purpose of the loan is to hold you over until you get paid means that you are not going to be able to get a loan that exceeds the amount of money you make on a single paycheck

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