Did you know there are more payday loan lenders in the U.S. than there are McDonald’s?
This means that it’s even easier than most Americans assume to request a payday loan.
Payday loans are short-term personal loans designed to smooth the transition between paychecks.
For some people, making it to the next paycheck can often be financially impossible. Unexpected medical bills, a family emergency, or plain old credit card debt can deplete a paycheck.
With payday loans, however, it’s possible to get the cash you need before your next income check arrives.
You can also use your payday loan in more ways than you realize. In this post, we’ll talk about what your next payday loan could pay for!
What is a Payday Loan?
Payday loans are personal loans available to U.S. consumers. They differ from traditional personal loans in several ways.
For one thing, payday loans are more short-term than a standard personal loan. You must pay off most payday loans by your next paycheck or similar payday.
The purpose of payday loans are to help out American workers who struggle to make it to their next paycheck. Believe it or not, such a struggle is not uncommon.
78% of full-time American workers claim that they are living paycheck to paycheck! This percentage doesn’t include retired individuals who must make social security payments stretch.
The good news about payday loans is that they often don’t require a credit check. Most lenders of standard personal loans will inspect borrowers’ credit ahead of time.
In many cases, only borrowers with a certain credit score may be eligible for certain loans. Lower rates and better loan terms are often available only for people with specific credit history.
If you have little to no credit history or if your credit score is less than stellar, payday loans can be your financial solution. Depending on the lender you choose, you may be able to request a loan and receive funds within 24 hours.
It’s important to note that each payday loan lender is different. The loan your request may be subject to a high APR (interest rate), depending on borrower qualifications and the amount requested.
In some cases, payday loans can have APRs as high as 400%.
Some lenders may also require a strict and frequent repayment plan. Most payday loan borrowers must commit to payments twice a week or twice a month.
Don’t let this dissuade you, however. It is possible to get a payday loan that has a manageable payoff period and rate! Learn more by reaching out to us here.
Where to Get a Payday Loan
You can get a payday loan from a variety of lenders. Most of these lenders use online platforms. Others, however, have brick-and-mortar offices.
In fact, you can even get what’s called a “payday alternative loan” from a local credit union. These loans are short-term but subject to APRs lower than 28%.
You do have to be a member of your credit union to qualify for one of these loans. And you likely have to have a specific credit score.
Nonetheless, it’s important to assess all your lender options before you request a loan.
This means taking the time to identify how much cash you need. It also means comparing quotes from different lenders so that you can choose an offer that works best for your financial needs.
At Bonsai Finance, we can help you navigate the payday loan process, no matter your creditworthiness. Learn more about bad credit payday loans here.
10 Ways to Use Payday Loans
Payday loans often have a more lenient application process than other personal loans. Once again, this is because their purpose is to help out the average U.S. worker in a pinch.
For this reason, people who borrow a payday loan aren’t often restricted in what they can use that loan for. In general, you can use a payday loan to help you out in any financial situation.
Here are some examples of ways you can use payday loans.
1. Finance Your Honeymoon
Yes, you can use payday loans to finance your honeymoon–or other significant life events, for that matter!
Honeymoons or vacations can be costly, even if you are planning a budget-friendly trip. Payday loans can be a great solution for such financing, particularly because they are short-term and offer immediate cash.
Given the fact that the average honeymoon costs $4,500, payday loans can be an asset for couples needing cash fast.
It’s important to note that if you do finance your honeymoon with a payday loan, be sure you are clear on repayment terms–and make sure you can commit to these terms.
No one wants to come back from celebrating their marriage to a big fat bill on their kitchen table!
2. Build Credit
If you’re looking for ways to build credit, a payday loan could be your solution. You don’t only have to reduce your debt and missed payments to fix your credit.
You can build healthy credit by proving your ability to be a good borrower. If you take out a payday loan and make your payments religiously, this can actually boost your credit score.
This is particularly the case if you take out several payday loans in a given year.
Learn more about using a payday loan to build credit here.
3. Tackle an Unexpected Cost
Family emergencies and unexpected trips to the hospital do happen. And when they do, they often come attached to high bills.
This is especially the case for people who have inadequate or nonexistent health insurance.
Tackle unexpected costs by taking out a payday loan, particularly if you feel confident in your capacity to make payments on time.
4. Consolidate Credit Card Debt
The average American has $38,000 in personal debt. In most cases, a large percentage of this number is credit card debt.
If used wisely, credit cards can be your solution to building credit and navigating your personal finances. But sometimes life happens, and it’s tough to pay off your credit card balances every month.
If you keep carrying balances on your credit cards, you can consolidate this debt by taking out a payday loan or other personal loan. Learn more about debt consolidation here.
5. Cover Holiday Expenses
The holidays are right around the corner: are you prepared for them?
If you’re a parent, your kiddos may be expecting gifts under the tree or a fancy dinner at Grandma’s. But what if you can’t afford to cover even the smallest of holiday expenses?
You can actually use a payday loan to finance holiday expenses, no matter how small these may be. If your Christmas bonus seems too far away, a payday advance can help you buy those gifts ahead of time.
The same goes for airplane tickets or other travel expenses for holiday purposes.
6. Ease Bill Payments
If you feel as if you are drowning in bills, payday loans may be a good solution.
Whether you’re struggling to pay your utilities, your rent, or your credit card minimum payments–or all the above–you can use a payday advance to ease these payments.
Keep in mind that you should only use payday loans as a strategic steam valve in this situation. A loan does incur additional bills, so only go this route if you feel confident in your ability to make your loan payments on time.
7. Navigate Unemployment
No one likes unemployment. If you are currently between jobs and hurting for money–even despite those unemployment checks–a payday loan can help.
However, do keep in mind that payday loans are helpful in this scenario only if you can commit to repayment terms.
Learn more about receiving a payday loan if you’re unemployed here.
8. Pay for College Books
As a college student, you may be at several financial disadvantages. Most college students have to buy a bunch of books for their courses. Many also don’t have an extensive credit history.
This can mean that the credit cards you do qualify for have low credit lines. You may not even be able to qualify for a student loan!
If you’re in need of textbooks–and mom and dad don’t have any pennies to fork over–consider a payday loan. A short-term loan can help you finance those books so that you can stay on top of your courses from the start.
9. Finance Doctor Visits
Most standard doctor visits cost uninsured consumers an average of $200. Even insured consumers may have to fork over a minimum of $50 for primary care visits.
If you’ve put off an annual exam or if you are in desperate need of antibiotics, you may find yourself waiting at Urgent Care. But what about that bill you’ll get at the end of it?
You can finance doctor visits with payday loans! In fact, many payday loans cap out at a certain value (like $1,000), so a $200 doctor visit is an ideal expenditure in this scenario.
10. Support an Elderly Relative
Most elderly individuals receive Social Security payments. Even so, these checks may be insufficient to support an elderly relative for a variety of reasons.
If you have an elderly relative in need of additional financial support, a payday loan may be a good option.
Payday Loans: Final Thoughts
Payday loans offer everyone a chance to borrow cash quickly, often without a credit check. It’s possible to request a payday loan from a variety of online (and in-person) lenders.
While these loans are often high-cost, with steep APRs and strict repayment terms, they can finance many situations. These include doctor visits, debt consolidation, and even holiday expenses.
If you want to learn more about payday loans, we can help. Visit our Learning Center to start taking control of your finances now.