Many consumers these days make the mistake of attempting to take out a payday cash loan for the wrong reasons. When taken out responsibly, a payday cash loan can be a convenient way of obtaining a little extra cash when your monthly outgoings temporarily exceed your incomings. Perhaps you’re facing an unexpected home repair, for example, or have a last-minute trip to make. These are one-off costs which you will easily be able to cover with your next month’s wage; and that’s exactly how the payday loan is supposed to work.
Too many people take out a payday cash loan simply because they want to spend a little more that month, however, treating the loan as though it were a credit card or personal loan. Perhaps they have seen an item of designer clothing they’re sure won’t be there next month, or just feel like splashing out a little to cheer themselves up. Unfortunately this can lead to an addictive cycle of spending that can easily get out of control. This is the sort of situation that payday loan providers and the Australian Securities and Investment Commission want to avoid, and this is why the National Consumer Credit Protection Bill was drawn up in 2009. So how do you know when a payday cash loan is suitable for your situation?
To put it simply, a payday loan is for emergencies. Other types of longer-term credit can be used if you need to buy a non-essential item or go on holiday. If you find that you have overspent, however, and cannot meet the minimum payment on a credit card or loan, a small payday loan may help you to cover that shortage without defaulting on your primary credit account, thereby keeping your credit record healthy. If you are short of cash for essentials to reach your next payday, then a small payday loan can ensure that you make it to the end of the month without a struggle.
Whatever your reason, as long as you know that you will be able to pay off your loan in full with your next wage, and have enough left over to live on, then a easy payday loan may well be suitable for you. Payday lenders these days always ensure that they only lend to customers if it is financially viable. If you wouldn’t be able to pay the full amount off, then a longer-term form of credit may be more suitable for you. If you’re struggling with your debt, it’s a good idea to discuss your situation with a financial advisor who may be able to suggesting a way of consolidating it into one low monthly payment.
