There are a wide variety of a reasons that people take out pay day loans. Of course, the overriding reason is an imminent need for cash fast, but what are the reasons behind this? We’ve listed the 10 most common reasons, so if you find yourself in any of these situations, could a pay day loan be right for you?
Table of Contents
Loan for Debt Consolidation
Many payday loan users take out money to cancel out other debt. This is not always advisable, but it does happen!
Redundancy
Redundancies are rife in this day and age. When unemployment hits, many people find themselves attempting to scrape money together. When you are desperately trying to make end meets, a payday loan can come as incredibly handy, just to tide you over until your next instalment of cash hits.
Reluctance Asking Friends and Relatives
It’s only natural to feel hesitant about asking people you know for cash. The upside of doing this is that there won’t be any interest rates or specific deadlines, but it can cause rifts in relationships. Because of the potential family friction, people might just take the risk of substantial interest instead, rather than risking ruining relationships.
Holiday Loans
Whether it is for a summer getaway or over the festive holiday season, people become desperate at these times of the year as they struggle to buy everything they need. People use payday loans because they often seem like the best solution. You get the money you need for the Christmas period, and then you can pay back what you owe in the new year, hopefully, after you have made some money.
Repaying Mortgages
There is nothing worse than falling short on your mortgage repayments. Small loans can help you alleviate this issue if you find yourself in this position.
Payday Loans for Bad Credit
Bad credit can cause people to use payday loan lenders who don’t consider your financial history, but instead your current affordability. Banks will not allow people with a poor credit score to take out a loan because of the perceived risk. However, a better long-term solution is working to fix your credit rating by paying off money that you owe and paying bills on time for at least six months. A higher credit rating can help you access credit more easily in the future.
Paying Bills
This is something everyone can relate to. Many believe that a loan is the best route to take, but there are other ways around this. Cutting energy costs can help you save money, without having to put yourself in financial jeopardy.
Loans for a Medical Emergency
Although national healthcare exists, there are times when specialist care is needed. all depends on the type of treatment that you need. If you don’t pay the bill straight away it builds in interest, like any other debt. Medical issues are certainly one of the significant reasons people use payday loans or short-term loans.
Paying off Your Overdraft
From students to those who have taken out an overdraft with the bank to help with any of the above, it can be upsetting when you check your bank account and find out that you have gone overdrawn. As the bank may charge you for going over your overdraft, a small or payday loan could be the rightful solution to help you get back on your feet.
Unexpected Debt
Lastly, we must always expect the unexpected. It may feel like this will never happen to you, but anything is possible. There is no easy way out of this situation, and many people use payday loans for help. If you find yourself in a financial crisis, always seek professional help to assist with any short-term financial difficulties you may be experiencing.
