Are you someone who has devoted a major part of your savings to all the necessary bills and now you don’t have a penny left to pay off your medical bills, college tuition fees and student loan monthly bills? If answered yes, a payday loan might serve as the solution to all your financial woes. But beware as there is a high cost attached to it. Since the lenders don’t check your credit score while lending this loan form, they will charge you huge fees in order to secure themselves against loss in the event of a default. Such loans usually take a big bite on your budget and hence you should have all the facts on a payday loan right before taking the plunge. There are some questions that you need to consider before taking out a payday loan. Read on to check them out.
Questions that you should ask yourself before taking out payday loans
- Am I facing huge trouble in making ends meet?
If you are facing trouble in making ends meet, a payday loan will help you solve your problems. However, in order to be sure about whether or not it is the best alternative for you, you can set an appointment with a credit counseling organization where you can get unbiased advice on your current state and the debt relief option that befits your income and affordability.
- Do I really need this or can I manage without taking out a loan?
Taking out another loan in order to repay your previous loans is more like fighting-fire-with-fire approach towards debt repayment. Hence, before you rush to take out payday loans in Australia, you should consider whether you could avoid borrowing by either requesting your creditor for some extended time or by taking some other step. Tell them that whenever you receive your next pay, you will send them post-dated checks. Try out some alternatives and if they don’t work, take resort to payday loans.
- Is there any other cheaper alternative to payday loans?
Watch out for some worthy alternatives. Could you receive a cash advance from your employer? Or could you get a cheaper form of credit from a credit union or any other financial institution? Is it possible to take out a small loan or a line of credit or an overdraft protection from your account? Or might be a loan from a close friend? Or a cash advance on a credit card? Try out the alternatives before signing the agreement with a payday loan company.
- If I take out this loan, am I sure about my ability to repay it on time?
Last, but not the least, this is the most important question that you should ask yourself. If you think you can’t, taking out a payday loan will do nothing but worsen your financial situation. Penalties and interest will make your loan tougher to repay.
So, before taking out payday loans, make sure you find the appropriate answers to the above mentioned questions. Beware so that you don’t drive yourself into the high interest debt trap.