Personal payday loans are noteworthy because of their versatility. The funds can be used for many purposes, from dealing with the past to planning the future and practically everything in between. Although these products can help you achieve your goals, they are not always the best solution.
Before using a personal payday loan, learn more about what you can use them for – and then decide if you should start to fill out the application.
How do personal payday loans work?
Personal payday loans are credit products and many banks, credit unions and online lenders offer them. These loans are usually unsecured, which means you don’t have to provide any collateral.
All of them usually involve specific conditions, including issues such as:
- The number of months or years to pay back the loan
- The interest rate the lender charges you to finance the loan
- Monthly fee
Some loans include loan fees, which can range from 1% to 8% of the loan amount. For example, the fee for a loan in the amount of 5000 dollars can be from 50 to 400 dollars. Fees will be charged on the main amount and interest will be charged on the whole.
After applying for a personal payday loan, the lender will check your credit history and credit results, and analyze your cash flow to determine if you can handle payments. If you are approved, money may be available in a few minutes or days, depending on the lender.
What can I use a personal payday loan for?
You can use loan funds for a variety of things, and some are financially healthier than others. Among the wide range of options you can bet on some of the following.
Debt Consolidation: If your current party of creditors burden you with high interest rates, a personal payday loan to consolidate old debts using one lower interest rate can work in your favor, especially if there is no initial payment. One caveat: if you are consolidating credit card debt, you can use these accounts again. These credit lines can be tempting, so make sure you decide not to use your cards when paying off the loan – otherwise you can go back to the same situation, but with an even larger debt stack.
Medical bills: Personal payday loans can help you if you don’t know what to do with your growing medical bills. Since these obligations can be very high, try to negotiate the bills first. Your doctor can give you a discount. If not, you may be able to pay in installments at no extra cost, so you don’t have to borrow money and thus pay interest. If these strategies do not work, a personal payday loan may be needed to pay off this debt.
Student debt: Although you can pay back a student loan with a personal payday loan, this is usually not sensible. The student loan interest rate is usually lower than for other loans and the payments for the new loan are likely to be higher.