For the most part payday loans are potentially dangerous financial products, with the potential to suck borrowers into a never ending spiral of borrowing money and paying it back. These loans typically come with eye popping interest rates, and the fine print can be daunting to say the least.
That does not mean, however, that payday loans are always bad, or that they should always be avoided. There are some very specific circumstances in which a payday loan could be the best, if not the only, answer, and here are some of those situations.
Using a Payday Loan to Avoid Higher Fees
Sometimes the high interest rate on a payday loan can be justified if the money is used to avoid even higher fees. If your credit card bill is coming due, for instance, a short term payday loan could allow you to avoid not only interest charges but late payment fees as well.
It is important to do the math when contemplating a payday loan for this purpose. Sitting down and calculating what will happen if the payment is not made and which fees will be applicable can help you decide if a payday loan is actually the less costly option.
Using a Payday Loan to Stop a Pending Vehicle Repossession
When your car is facing repossession, that loss could have repercussions that ripple long after the tow truck has left the driveway. Once that car, truck or SUV is gone, you may be left without a way to get to work, and that could leave you unemployed as well.
Using a payday loan to halt a pending vehicle repossession can be a smart move if it will preserve your ability to earn a living. If you do have other options like public transportation the payday loan may not be warranted, but in extreme circumstances it could be the least worst option available.
Using a Payday Loan to Avoid Eviction
Eviction is another short term problem that can have long term ramifications, and avoiding it is another reason to at least consider a payday loan. Potential landlords may refuse to rent to those with an eviction on their record, and that could make finding a new place difficult even if your financial situation turns around.
Being forced to move will also be costly, with relocation expenses you will likely be unable to pay. If you cannot pay the moving fees, you may be forced to sell off, or simply abandon your furniture and other possessions, driving the cost of starting over even higher.
If you are facing eviction, using a payday loan to bring the rent current could be your best course of action. That assumes that you are able to pay the loan off and make other changes to improve your finances, but a short term loan could be the bridge you need in a difficult situation.
As you can see, a payday loan is not always a bad deal, and there are times when this short term financial bailout is actually the best option. Like everything else involving money, the payday loan situation can be complicated, but you should not dismiss it out of hand, not when there are reasons to embrace it.