Top 10 Common Reasons Why People Take Out a Payday Loan

625 Views Updated: 21 Sep 2018
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Top 10 Common Reasons Why People Take Out a Payday Loan

People have mixed reviews about payday loans based on their own experiences and how they’ve used them. The nature of the loan itself make this type of financing available to anyone and it has been very popular these past several years. And whether those who have used payday loan have seen it as good or bad, that’s not really the point. What’s important is whether it can be useful or not. A financial shortfall can be really stressful that’s why people turn to a sudden need for extra cash which makes payday loan a relief for that problem.  

Most of us borrow money for all manner of reasons. In this article, you will learn some of the 10 common reasons why someone might take out a payday loan or with a same day cash advance.  

#1 Difficulty in getting a bank loan  

A shortfall in cash can happen to almost anyone, and sometimes they go for help from small bank loans or mortgage loan modifications so they can pay for their rent and mortgage. The problem that most people encounter when turning to these options is that mortgage loan modifications aren’t always easy to get. It’s either you wait for your lender’s approval or you waste months trying to finalize or appeal lender’s decision. This is when payday loans enter the picture, a faster solution to help you with your needs.  

#2 Fast solution for medical emergencies or auto expenses  

Incidental expenses can happen because of unplanned medical needs, auto repair, car accidents, and anything else that’s unexpected. These kinds of events may compel large out-of-pocket costs that are just imposing a financial burden. People are not prepared to pay these so they seek for payday loan assistance that can help them make the emergency care, service, or purchase as early as they can.  

#3 Help a friend or family member  

Whatever reason that your family or friend have, you can find yourself in the position to be the one to take a payday loan out, help them, and take care of the repayment afterward. They may not have the money of their own to use or not able to apply for the payday loan themselves, so you assist them in the meantime and they’ll pay you thereafter.  

#4 Pay everyday bills like utilities, groceries, and rent  

Studies have shown that 69% of the average borrower of guaranteed payday loans is using it to cover recurring expenses–credit card payment, rent, bills, and groceries. These kinds of borrowers normally experience a cash shortfall and they consistently turn to payday loans to help them stay current without cutting back on to many other external expenses.  

#5 To keep up with credit card debt  

It can be a bit aggravating when credit card companies and other loan lenders may give you multiple phone calls a day or threatening letters when they collect payment and debts. If you don’t want this to stress you, you can use a payday loan to pay your collectors. A payday loan may be beneficial to make lower credit card debt or to cover a credit card charge.  

#6 Doesn’t require a credit check  

Whether you have a bad credit or no credit all, applying for a payday loan is very easy without requiring a credit check, you can be approved instantly. This is the reason why this kind of loan is so desirable and largely used in different countries. Lenders don’t look into your credit history and the approval takes an hour and much shorter compared with traditional loans that review your credit score.  

#7 No need to ask for help from family and friends 

Some people are not that comfortable borrowing money from their relatives and friends for help because money can be a matter of pride. Payday loans are a great solution for you to take care of the issue yourself without involving anyone else.  

#8 To cover a debt or bill that can cost much more  

To avoid large penalties or loss of assets or collateral such as a car or an important appliance, it is worth taking out a payday loan despite the interest paid with it than losing your goods.  

#9 Because saving up may take too long  

This usually happens when something you badly want and needs come out all of a sudden and you don’t have enough money for it and saving money for it is not going to work. A payday loan is useful in this situation if you don’t really want to miss out the thing that thrilled you.  

#10 Repaying will be easier for financially well-off borrowers 

For some, it’s much easier to borrow money than spending what you really have even if you have enough money to cover the loan. Plus it’s more cost-effective compared to making a purchase using a credit card depending on your interest rates.  

If you do plan to take out payday loans, you now have 10 reasons to consider one. It’s faster and easier and you won’t have any complications and problems compared to other traditional loans. Just make sure that you can repay on time so you can also protect your credit.  

Author Bio: Ivandrea Ollero is a daytime writer for Quick Cash, a cash loan and payday loan lender in Australia. Ivandrea writes to provide information for successful cash loans and payday loans to help people over a difficult patch. 

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