If you have nowhere else to turn and are genuinely in a financial emergency, then a pay day loan could be the answer. It’s pretty much got to be the last answer though, purely by dint of its punishing APR – which will break you if you don’t manage to pay the whole loan back in a matter of weeks. Let’s have a look at what a short term loan (that’s what cash advances are) is, how it’s used and what you can expect from one. That way you will hopefully arrive at a better idea of whether or not it is right for you. Cash advances are designed to bring small amounts of money to you, for the return of the same sum plus a percentage of a massive APR as soon as you can manage to do it.
The huge APR of a short term loan is theoretically there to force you to pay the full amount, plus interest, as quickly as you can. If it works, that’s good – it means you can tide yourself over when emergencies strike, and pay back everything in double quick time (as a slide rule, if you borrow around fifty and pay off your loan within a month you will pay back something like sixty – whereas if you end up struggling to make payments for a year, you will pay roughly four hundred back for the fifty you originally had).
In order to successfully manage your cash advances, then, as well as your financial emergency, you need to be borrowing an amount that you can repay within four weeks, plus interest – plus all of your normal monthly living expenses. Otherwise you will just end up getting cash advances every month and then watching your pay packet disappear as you pay back everything you spent four weeks ago. If you need consecutive cash advances there is something wrong. You need to fix your finances. Start by examining every single thing you spend money on and working out which items are vital to life and health. Everything else is expendable. Make a list of the things that are expendable, with their monthly costs next to them. Then rank that list in order of preference to keep, with number 1 being really don’t want to lose and larger numbers representing an easier loss. Then add up all the costs next to the highest numbers until you have saved your shortfall. A single cash advance is a perfectly legitimate and useful thing to have – if, as noted, that it can be paid back in full, plus interest, within one month without leaving you too poor to live. It can take care of expenses that come out of nowhere and can’t either be avoided or put off. What it should never be, is a walking stick for you to rely on in order to keep your household finances running from month to month and year to year. IN that case, with no other option left to try, you would be better off going bankrupt. In any financial situation, you should take the unbiased advice of a professional. The most unbiased of all are the people who work at the citizen’s advice bureau. Ask before you take the plunge.
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