Use Only for Emergencies

Posted by on Jul 26, 2006 in Tips

Use Only for Emergencies

Payday loans are short-term, high-interest loans intended for emergencies.

They are the most expensive form of credit available and, even in emergencies, should only be used as a last resort.

Pain awaits those who follow the sweet invitations of unethical lenders and try to use them otherwise…

Unethical payday lenders invite borrowers to use loans for anything.

Use your money for whatever purpose you wish. If you have some bills due, something you need to buy, or just want to have some fun!

Fun? Paying a large portion of your next paycheck to a lender and living on a fraction of your income during the month after (or finding yourself on the debt treadmill for several months) is fun? Where did they look up the definition of fun? The Psychotic’s Dictionary?

Another unethical lender writes:

…great for emergencies, paying rent, catch up on your bills, or take a vacation!

The only vacation you will be taking with a payday loan is a vacation from fiscal responsibility.

As for catching up on bills or paying rent, negotiating a payment plan with creditors and getting a cash advance from your employer are cheaper payday loan alternatives.

While many lenders invite borrowers to ‘reward themselves’ with payday loans, there is no reward waiting at the end of an expensive loan. High-interest loans are a punishment for poor planning, not a reward.

Payday loans should only be used in time-sensitive financial emergencies:

  • unexpected medical expenses that need to be paid immediately
  • car repairs only when your car is necessary for work
  • home repairs only when failure to repair immediately can lead to safety issues for your family or more expensive problems (electrical problem that could create fire hazard or small leak in plumbing that could lead to flooded basement)

The key words here are time-sensitive and emergency.

Avoid using loans for expenses that can be delayed:

  • repairs on a car that is not essential for work (consider public transportation until you can afford repairs)
  • fixing a TV or other luxury appliance (go without until you can save enough to pay with your own cash)
  • home repairs that don’t need to be fixed immediately (damages that are aesthetic in nature and don’t have a negative effect on function or safety of home)

Despite what unethical lenders say, payday loans should never be used for luxuries:

  • vacations (you will enjoy your vacation more if you don’t have an expensive loan payment hanging over your head)
  • shopping (new TV, Christmas presents, etc.)
  • unnecessary home improvements
  • gambling (some unethical lender sites are covered in ads for online casinos!)

The short-term luxuries you indulge in today may rob you of long-term necessities tomorrow.

Even in emergencies, payday loans should only be used as a last resort. Please consider cheaper alternatives.

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