Borrowing Money Against Your Paycheck For Emergency Expenses

Posted on

Living paycheck to paycheck is tough and there are times when you just cannot wait until the next payday to pay a bill or buy something you need right now. It is for those times that payday loan companies exist. They offer a service that can put money in your pocket before you get paid but use caution when you decide to go that way because the loan you take out needs to be paid in full when you get your next paycheck in most cases.

What Is A PayDay Loan?

The basic idea behind a payday loan is pretty straight forward. The company, such as Cash Depot Inc., loans you cash for whatever you need but in turn, you repay it with interest on your next paycheck. Some companies allow repayment over several pay periods but you will have to inquire about that when you go to get the loan. The amount of the loan is typically set by your weekly income and what they feel you can afford to payback.

Managing A Payday Loan

There are some things to keep in kind when you consider taking out a payday loan. First, the amount of money you apply for should be limited to what you really need, not what you want. If you take out the maximum allowed, and then combine that with the fees that the loan carries, you could be in a situation where you have to pay off the loan using your entire paycheck and then you are right back in the same place, not having the money you need to get to the next paycheck. Be very careful when you start looking at the amount of money you need and don't take more just because you can.

Common Reasons For Payday Loans

There are a lot of reasons to take out a payday loan some of which are emergencies, some are not. In many cases, payday loans are used for living expenses or things like unexpected repairs on your home or car. If you are between paychecks and your car breaks down, you might need a couple hundred dollars to fix it so you can get to work and back. Unexpected household repairs like a broken appliance or paying for an emergency repair like a plumber that has to fix a broken pipe at 3 a.m. can also be cause for a payday loan. You could even use the money for groceries if you are short one week. Just remember, whatever you borrow today, needs to be repaid on your next paycheck and in full.