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Sometimes, you need emergency cash right now. This situation isn’t ideal, but you can’t always make it to your next payday without extra help. Here are a few important rules to live by when you use payday loans to take care of your short-term funding needs.
Multiple payday loans create a financial nightmare. You constantly play catch up and could easily fall behind on payments. You end up owing far more than you originally took out to deal with an emergency, and your credit score suffers if you can’t keep up. Payday loans are designed to cover the one- or two-week gap between paychecks. When you go beyond that period, the interest rates quickly become unmanageable.
Another payday loan debt trap is getting a loan amount that’s too high for you to pay back comfortably. Take out the amount that you need, not the maximum amount that the lender offers you. When you avoid this temptation, you don’t end up in a difficult position where your paycheck doesn’t cover the loan amount.
In some cases, payday loans may not be the best funding option for your particular situation. Spend some time looking into other ways to get money for your emergency. Friends and family members may be able to lend you money to cover the expenses. Credit cards have lower interest rates than payday loans, so that could work out for you as well.
If you have a business, small business financing options give you ways to overcome short-term cash flow issues. You don’t need to take out a payday loan when you can leverage a solution that’s better suited for your commercial requirements. Flexible small business loans, merchant cash advances, SBA bridge loans and business lines of credit are the primary options in this category.
Emergencies don’t wait for ideal times, so you need fast funding sources that account for this. Payday loans and online loan sites can be a helpful tool when you need cash on hand, but it’s important to look at all the factors that influence whether this is a good choice for your situation.