Payday loans are essentially are a type of short-term borrowing where a high-interest credit is allotted by a lender based on the borrower’s financial situation and credit check. The idea is that the money borrowed comes straight out of the borrower’s next paycheque. But what are the reasons that someone might need to cut into their next paycheck before it is due?
This piece discusses some of the reasons why payday loans are used.
Redundancy and Payday Loans
Redundancy is currently at a significant high, and with that, so are the stress levels. The situation can be extremely unpleasant and leave those without an income in a desperate predicament. Bills still need to be paid, rent still needs to be paid, and food still needs to be put on the table.
In a time where someone can be desperate to make ends meet, a payday loan can be a very appealing option for a few reasons. Payday loans offer a lump sum of money upfront, it helps take the immediate panic and stress out of being made redundant, and it can help keep things ticking along if there is the promise of another employment shortly in the works, acting as a bridging gap.
“Santa is the one who has to bear the financial burden”
Holidays and Payday Loans
Christmas’s, birthdays, Thanksgiving… even though the date for holidays is the same every year, they still manage to creep up! Being strapped for cash around the holidays is another common reason people opt for taking out a payday loan. The logic behind payday loans around holidays is that quick injection of cash can help pay for presents or parties, with the goal to pay back the loan in the ‘new year’, for example. Parents can also feel under pressure when it comes to Christmas, as “Santa” is the one who must bear the financial burden.
Bad Credit Score and Pay Day Loans
A good reason people turn to short-term loans is because of the leeway offered when it comes to bad credit history or current credit scores. Traditional loans will often reject those who don’t have a good credit score, but payday loans allow cash to those struggling as long as the loan is able to be paid back. LoanPig identifies Short Term loans as a simple and efficient way of obtaining a cash injection without any hassle if bad credit scores are an issue.
Medical Emergencies and Payday Loans
Medical emergencies are one of the top reasons someone would apply for a payday loan. It is extremely expensive to get healthcare in America, and an ‘out of the blue’ injury or accident can leave people extremely out of pocket, or worse, not able to receive any treatment. Not everyone has the luxury of health insurance through a job or being able to afford it, so payday loans are turned to when an urgent medical issue pops up.
When it comes to money, sometimes there is just no other choice than to apply for a loan, and there can be many reasons that someone finds themselves in a position where they must do so.