How To Take A Payday Loan Out More Responsibly

Payday loans sometimes get a bad reputation for being expensive and hard to pay back. However, some of these criticisms are more the fault of the borrower than the lender. Taking out any loan without first ensuring that you'll be able to pay it back is not wise. If you're in a financial bind, a payday loan can be a way to keep your bills paid. Just make sure you follow these tips to borrow more responsibly.

Don't borrow more than you need.

If you are $300 short on the rent that's due in two days, you should only be looking to borrow that $300. Don't borrow an extra $100 to go shopping for new clothes while you're at it. Borrowing more than you need will make it harder for you to pay off the loan when payday comes around. You might then find yourself short on next month's bills, forcing you to take out yet another payday loan. Since you do have to pay interest on the loan, you want to take them only when needed -- not make taking out loans a regular habit. Only borrowing what you absolutely need for emergencies is a good way to do this.

Have a plan for paying it back.

Make sure that you can, in fact, pay the money back when your next paycheck comes in. If doing so will prevent you from being able to pay other expenses (for example, if you'd normally pay your car loan out of that next check, but you'll have to pay back the payday loan instead), then make a plan to raise the additional funds to pay off the loan in the meantime. You could have a garage sale, babysit for some extra cash, or try to pick up a few more hours at work.

Check to see whether paying a late fee might be a cheaper choice than taking out the loan.

Figure out how much it will cost you to take out the loan. In other words, how much will you owe in interest when you pay it back? Then, figure out how much extra you'll have to pay if you just wait a few days to pay the bill in question, rather than taking out a loan for it. For example, perhaps you could pay your rent 2 days late with a $20 late fee, but it would cost you $30 in interest to take out a loan. Paying the bill late in this case is actually cheaper than taking out the loan. In some cases, the loan will be cheaper -- so you'll need to do this comparison every time you're considering a payday loan.

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