Collaborative Post

3 Instances When a Short-Term Loan Makes Sense


No one likes the idea of taking on debt, especially if you already have debt to begin with. Nevertheless, certain situations can arise that would make taking on a payday or short-term loan the best solution to a personal financial crisis.

The topic of payday loans is a controversial one, with many people strongly advocating against the practice. The main argument is that too many people see an easily obtained short-term loan as an easy fix to any financial troubles. While this ideology doesn’t quite make sense, there are a couple of reasons why taking out a short-term loan would be the fiscally responsible thing to do.

1) In Case of Emergencies

While it would be nice to have sizeable savings account always at the ready in case an emergency comes up out of the blue, that isn’t always realistic. Things like car repairs, home repairs, or medical emergencies can happen without any warning and cost a large amount. In such situations, time can be of the essence, so it might make sense to consider Loans now.

A payday loan will allow you to access funds quickly so that you can cover any emergency expenditure. Once you have the funds to pay off the loan, presumably within your next one to two paychecks, then you should be able to avoid any negative impacts caused by taking out a loan of this nature.

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2) Your Employer Misses a Paycheck

If you work for a government agency, private contracting, or any freelancer with unreliable clients, you might experience the unfortunate occurrence of being paid late, or not exactly what you have invoiced the company. Once again, it would be ideal to have the exact amount of cash that you would need to cover your monthly expenses in such cases in a savings account at the ready. The reality is, though, that you probably will need a little help to make ends meet while your employer catches up with your pay.

3) You Have Extremely Poor Credit

If you find yourself in a situation where you need to borrow money right away, but your credit is very poor, then a payday loan might be your only option. The reason for this is that short-term lenders don’t care if you have a low credit score. The interest rate offered on most payday loans is going to be high no matter what your credit score may be, so your score doesn’t come into play at all.

The important thing to always bear in mind is that not all financial issues can be solved with a payday loan. If you don’t have a plan to pay back your loan in the timeliest manner possible, a loan of this nature could very easily make your financial situation much worse. However, if you approach your loan sensibly and responsibly, then it will not harm your credit score and might even help to show other lenders that you can pay back loans that you take out.

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