Avoid These 5 Common Payday Loan Mistakes to Save Money
Payday loans are very popular in Canada for a number of reasons. First, getting a payday loan is lightning fast. It takes only a few minutes to fill out an application. The application could be approved the same day and funds deposited into you the following day. Second, even bad credit is welcome since your ability to pay is more critical than an impressive credit history. Of course, it helps to have a good credit score. Nonetheless, let’s look at a few payday loan mistakes that, if you avoid them, could save you money.
1. Applying for a Payday Loan as a First Option
Let’s face it. Payday loans can get you out of a tight situation, especially when you need cash urgently. However, a payday loan should be the last option, not the first port of call. The beauty of payday loan providers is they will listen to you when no one else will.
2. Taking a Payday Loan to Settle Another Debt
Don’t take a payday loan to settle a credit card debt. This will only push you further into debt. Except in some special circumstances, taking a loan to pay off another is not a good idea. The best approach is to deal directly with your debt by negotiating easier payment terms. Only take a payday loan to meet an emergency, and paying off your credit card debt is hardly one.
3. Taking Payday Loans Whenever You Feel Like It
Things can get tight for you if you take one payday loan after another. Besides the amounts you will pay in fees and interest, it’s simply not a good idea to live from one debt to another. A payday loan exists to help you out, not to sink you into a debt hole. Once you receive your payday loan, commit to repaying it within the stipulated time.
4. Borrowing More Than You Need
This is a huge mistake. A payday loan is your friend, but don’t abuse it. Borrowing more than you need is actually an abuse of an otherwise good facility. It’s your responsibility to take a loan that you need, not want. Besides, the more you borrow, the more you will have to pay in fees and interest, and the higher the possibility you will have problems repaying the loan.
5. Not Understanding the Loan Terms
You need to understand the terms of a payday loan before you take one. Make sure you understand when fee payments are due. In most cases, these fees are deducted automatically from your checking account. Sometimes people forget the fees are due on certain dates. In the process, they overdraw their accounts only to be hit with overdraft fees from the bank, further sinking them into debt. It’s important to make sure you understand the terms of your payday loan and put in place a system that will remind you when payments are due.
Payday loans are perhaps the only recourse someone facing a financial emergency has. If you avoid the above critical mistakes, a payday loan can be an ally, a friend in times of your greatest need. Additional information and resources are available at Speedy Cash.