The Dos And Don’ts Of Using Payday Loans

The use of payday loans is a highly controversial subject in many financial circles. While some individuals believe that these short term loan products offer a valuable service to individuals who are in need of cash quickly, others believe that payday loans are designed to target low income people who are more likely to make poor financial decisions. While this debate is not likely to be settled anytime soon, the fact is that there are some valid points on both sides of the fence. Consequently, individuals who choose to take advantage of payday loan products should always follow a few basic rules in order to protect their long term financial stability.

The Dos Of Using Payday Loans

Do remain in contact with your lender regarding any problems with the repayment of your loan. Most payday lenders will offer alternative payment plans for individuals who are struggling to repay their loan on time. For instance, you may be able to pay only the loan fee and roll the principle of your original loan over to a new loan contract. You may also be able to break your repayment up into several smaller payments for a higher fee. Keeping in contact with your lender will allow you to explore all of the options that are available to you and allow you to avoid unnecessary expenses such as multiple returned-check fees.

Do look for lenders that report loan activity to the major credit bureaus. If you are going to pay the fees associated with a payday loan, you may as well reap the credit boosting benefits of repaying this loan on time. In order to enjoy these benefits, you will need to select a lender that reports all loan activity to the major credit bureaus rather than simply reporting delinquent accounts.

The Don'ts Of Using Payday Loans

Don't borrow more than you actually need. While the lender may be willing to offer significantly more than you need to pay your current obligations, these additional funds will come with additional fees as well. By borrowing only what you need, you will be able to increase your chances of successfully repaying the loan on time.

Don't take out more than one loan at a time. If you require more money than can be obtained through a single payday loan, you will need to explore other ways of obtaining this money. When taking out multiple payday loans at once, you will inevitably end up with multiple lenders trying to recoup their funds from your next paycheck. Unless this paycheck is truly enough to cover all of your loans at once, you will be setting yourself up to default on at least one of your loans.

In Conclusion

While there may be some controversy surrounding the financial benefits of using payday loans, the fact is that there are many people who have successfully used these short term loans, such as from 1st Choice Money Center, to avoid a financial crisis. If after careful consideration you have decided that a payday loan is right for you, keeping the dos and don'ts outlined above in mind will help to ensure your experience is also a successful one.