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Tuesday, October 27, 2009

Using a Pay Day Loan in a Tough Economy

At no time since 1974 has there been such a downfall in the American economy. Unfortunately, in 2008 alone, some 2.6 million people lost jobs. In just two months, from November 2008 to January 2009, unemployment numbers climbed from 6.7% to 7.2%, being the highest increase since 1993. Obviously, this has put many people in a troubling financial situation. The fortunate numbers of people that still have steady income are tightening the budget and some are still living paycheck to paycheck. For these people, sometimes they end up needing a short-term financial solution, which is available in the form of a pay day loan.

In summary, a pay day loan is unique, being a loan intended for emergencies. This type of loan is designed only as a short-term solution whereby the payoff date is typically within 30 days. However, reputable lenders offer extensions but these should only be used if necessary in that a higher interest rate might be charged, along with additional fees.

People caught up in this tough economy find that sometimes, they face a financial crisis in between paychecks. With no money in savings and having numerous friends and family members without jobs or also living on a tight budget, they feel there is nowhere to turn. In some cases, people become so stressed that work production and performance are affected, which means their job could be at risk. Instead of people fearing the worst, they need to know that a pay day loan can help if through the right lender and used for the right reasons.

Although some people take out a pay day loan for frivolous purposes such as a vacation, throwing a party, or even shopping, which is fine, a payday loan is actually more beneficial when used for difficult financial situations. The reason is that typically, interest rates are higher than with a conventional loan so it would make more sense for the vacation, party, or shopping adventure to be postponed until the person has the cash. On the other hand, if a person needed quick and easy money for a car repair, medical bill, utility bill, or some other need, a pay day loan offers a viable solution.

According to the president of the Economic Policy Institute, the labor market is unraveling and soon, unemployment is likely to hit 10%. Sad as this may be, experts still believe this situation is only temporary and that within a year or two, things will begin to turn around. However for immediate financial needs, even full-time employees are struggling. It seems that when something goes wrong, it is usually just after or weeks before payday, which is why having a means of getting $100 to $2,500 through a payday loan is so great.

Another scenario in which a pay day loan helps is for people that have lost a full-time job and while still searching, have only been able to secure part-time employment. In this case, if something unexpected happened and the person needed a few hundred dollars to get by, the payday loan would provide that person with the money needed. With a 30-day payoff schedule, the individual has enough time to pay the loan in full but if additional time were needed, again, most online lenders offer an extension.

Currently, jobs are available for health services, education, and governmental positions so if someone who had lost one job but was hired for another and then found they had an emergency arise, the pay day loan would also be a viable solution. Even if the person had only been on the new job a few weeks or months, as long as there is proof of steady income and a checking account in good standing, the loan would be approved. Unlike conventional loans where the applicant would be required to be on a job a minimum of six months, the payday or cash advance loan is different.

The good news is that the majority of people that apply for a pay day loan are approved. Again, as long as they have steady income and a bank account without a history of insufficient checks, the loan would be approved. To maintain dignity, going through a reputable online lender allows complete privacy by handling everything from home. While getting a pay day loan is possible through a local money lending company, this also means standing in line with other people, which for some is an embarrassing and demoralizing situation.

Although a pay day loan would be paid by the individual’s next paycheck, the tough part trying to deal with a financial hardship in between paychecks. For instance, if a person’s car had a radiator leak but this was his or her transportation for work, obviously getting the problem fixed would be a priority. With a pay day loan, the person could take out the money needed, get the car fixed, and miss very little or no work.
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