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3 Times Payday Loans Make Sense

Although payday loans are a type of credit that most borrowers should avoid, there are some cases in which this type of loan is actually less costly than other alternatives. Below are a few circumstances in which taking out a payday loan is the better choice.

1. A Payday Loan Costs Less Than a Bounced Check

In a financial crunch, some people write checks even though they know they don’t have enough money in their accounts. Since many financial institutions are raising overdraft fees, it may be cheaper to choose a payday loan instead of incurring fees. Overdraft fees can quickly add up, particularly if you’ve written multiple checks. In this case, it may be wise to opt for the payday loan.

2. A Payday Loan Can Be Cheaper Than Fines or Penalties

If you’re must pay a ticket or court costs, and you don’t have the funds you need, it might be cheaper to take out a payday loan. Failure to pay court costs and other fines can create more problems in the long run. If you can retain your driver’s license or avoid additional fines by paying the money you owe immediately, this is always a better option. If you know that you are going to need payday loans more than once, certain payday loan services will lower your interest rate if you have a history of paying on time, so that can save you some money on your loan and be better than taking on fines or penalties.

3. A Payday Loan is Often Cheaper Than Losing Utility Services

It can be very expensive to re-establish utility service if it’s disconnected for non-payment. In this case, a payday loan is a viable solution. It’s something that should only happen once, though. If you find yourself turning to a payday loan on a regular basis, you’re not using this option wisely. If you constantly struggle to pay utility bills, it may be a good idea to reach out to a charitable organization or find another means of obtaining the necessary funds.

Payday loans aren’t cheap, but they can be the cheaper alternative from time to time. It’s important to avoid becoming trapped in a payday loan cycle in which you often use loans on a regular basis or take out a new loan to pay off previous loans. If you use a payday loan responsibly, it can make life easier, but if you don’t, the financial damage can be substantial.

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