Taking out a payday loan is never an easy decision. For one thing, your financial circumstances are already uncertain. And you’re probably worried about what effect it will have on your credit rating. But you also know that you’re going to be paying a high rate of interest on anything you borrow. But sometimes a payday loan is essential.
Perhaps this month you’ve done everything right. You’ve not spent on anything frivolous. You’ve not blown it all on a big night out. You’ve not been placing too many bets down at the betting agency. It’s just that all the little expenses have added up, and at the end of it all, you’re left without a cushion.
I think planning is essential, especially if you’re on a budget. That’s why it can be a dangerous game in the first place. But often there are some good reasons to take out a payday loan. And some reasons to be grateful, despite regular media outrage, for the existence of this industry.
1. Your Car Breaks Down
If you’re living paycheck to paycheck and finding that you have very little money left over at the end of the month, planning for a large expense is hard. One of the most unpredictable things is the car. Sometimes a service can cost under $100. Other times, it can be ten times that. But planning for something that might not happen can seem like a real chore. This is especially true if that little bit of extra money can be spent on some of the finer things in life.
Most people in this situation would rather take their chances. If you took your chances, but lady luck wasn’t kind to you and your car did actually break down, this is a good time to think about getting a personal loan. If you need your car to get to and from your work then a payday loan can mean the difference between having an income and not.
2. Your Roof Starts To Leak
Home repairs can be a nightmare. Sometimes even if you have home insurance, companies will refuse to pay out. This often happens with so-called force majeure, when a natural disaster damages a large number of properties. Other times, the excess on the insurance can be a little too high to pay. Under these circumstances, it’s probably ok to take out a personal loan.
Just make sure that whatever loan you choose you get the best deal possible. Online payday loan sites can take some of the hassle out of that process.
They will send your information to creditors who will then bid for your business. All you have to do is choose the one with the best conditions.
3. You’re Owed Money And Still Waiting
If you’re a freelancer or self-employed and one of your clients is yet to make a payment, you can use a payday loan to smooth over a lean period. Often a situation like this can arise just after you’ve completed a rather large job, but for whatever reason, the client’s payment is late.
If you know the client is going to pay then it’s reasonable to take out a loan. Many personal loan companies have the option to pay back early so you can avoid high-interest charges. Cash flow problems can derail any enterprise. Even large companies sometimes need access to quick credit when things don’t turn out as they expected. Focus on building relationships with quality clients, if you can. And make sure that personal loans are something you only need rarely.
4. You Need A New Computer
So many people now rely on their computer and their internet connection to make a living. But even in 2016 computers are not the most reliable objects. I’m not saying that they’re bad. They’re so much better than they used to be. But they’re also that much more essential to making a living.
If your computer breaks down and you don’t have enough money in your checking account to fix it, consider a personal loan. If your desktop computer has broken down, make sure you save money by only replacing the part that’s broken.
It’s unlikely that the motherboard, processor, power supply and harddrive have all failed at the same time. This is where it really helps to know somebody who knows a thing or two about computers. Ask them if they can do some diagnostics to get the root of the problem.
5. Your Bank Charges Exorbitantly For Being Overdrawn
Most of us have an overdraft facility on our bank accounts. This can really prove useful in a bind. But there is a reason why banks are so keen for us to have this option on our accounts: they make money from it. Sometimes charges for being overdrawn at the end of the month can exceed $50. That’s why it’s so important to do everything we can to avoid spending more than we have, especially if we’re on a lower income.
It may sound strange, but personal loans are actually quite cheap compared to paying for going overdrawn. If you know you are going to go overdrawn one month, consider taking out a loan. It might affect your credit score, but so might going overdrawn. Plus, it buys you a bit of time to figure out where you are going wrong financially.
6. You See An Opportunity To Invest
Finally, you may have seen an investment opportunity which could mean that next month you’ll be rolling in cash. These situations are rare, granted. But they’re also a time when taking out a personal loan actually makes good business sense.
If you know an industry inside out and you know that you’ll make a killing, then dive in. Just make sure than the interest on the investment exceeds the interest on the loan. And beware, if the opportunity looks too good to be true it probably is.