Using Payday Advance Loans Wisely: Emily’s Smart Move
by:
Joel Walsh
Thinking about taking out a payday advance loan but worried about falling into a debt trap? Read this real-world scenario of how one person navigated the maze of payday advance loans to stay out of debt.
Ever wonder how some people manage to take out expensive payday advance loans and still come out on top financially? It’s not easy, but it is certainly possible. This is the story of Emily, one person who used a payday advance loan to dig herself out of a financial rut.
Emily’s charge card, car payment, cellular phone bill, and rent were all due in three days, $1,500 total. Emily had $500 in the bank. Her monthly pay check wouldn’t come for ten more days, and her boss said no to a payday advance. Loans were out of the question, she thought. She needed the money in three days, and a bank loan would take that long just to mail her the paperwork.
If Emily was late paying her $300 credit card bill, she would incur a $35 late fee which would make her balance exceed her credit limit, earning her a $50 over-the-limit fee. She couldn’t afford to be late on her car loan, cellular phone or rent, even though there were no late fees. Having paid each of those bills late a few times in the past, she’d be skating on thin ice if she did it again.
Cash Advance Payday Loans: Emily’s Salvation?
Emily decided to apply for a cash advance payday loan. She knew it would be foolish simply to trust a lender of these loans for information. Searching on the internet, she found a website that did not belong to a payday advance loan lender, but instead reviewed the payday loan lenders.
She visited the website of online payday advance loan lender that was rated particularly well. Emily knows there are a lot of cheats on the web, so she was careful. Here’s what she looked for:
• The loan company’s website had a link to the Better Business Bureau. Clicking on the link, Emily saw the company’s record: member in good standing with no unresolved complaints.
• The loan company’s application clearly stated what the fees were, and what the annual percentage rate (APR) was. It also stated what penalties Emily would have to pay if she did not pay back the loan on time.
• Looking at a few other websites, Emily saw that the original loan company’s loan terms, fees, and interest rates were competitive.
• She double-checked that her upcoming paycheck would be enough to cover all her outstanding bills.
• She then checked into all the bills she would have to pay in between her upcoming paycheck and the one after that. After all, with her next paycheck going to repay the payday advance loan, she would need to make sure there was enough money left over to pay her remaining bills. She didn’t want to have to take out another loan after that.
• Emily figured out that she would have $300 left over after she paid all the bills between now and the next month’s paycheck. Living for 40 days on only $300 would be a challenge. But she decided she could do it if she economized. She would bring her lunch to work rather than buy it in the cafeteria, and give up going out at night--including un-inviting herself from a co-worker’s upcoming birthday party at the neighborhood bar.
• She posted notes on her refrigerator, steering wheel, and wallet, reminding herself not to make too many car trips, waste food, or splurge. She made herself the goal of reading several books she’d always wanted to read, rather than going out. She got them free from the library.
Did Emily’s Payday Advance Loan Plan Succeed?
Fully prepared, Emily took a $1000 cash advance from the ABC Loan Company and repaid it on the 15th along with a $50 fee. She saved $85 in credit card penalty fees. She also stayed on the good side of her landlord, car loan lender, bank, and cellular phone provider.
The experience also brought home to Emily that she was living too close to the limits of her paycheck. She realized that she would be better off moving out of her studio apartment, into a room in an apartment of a few friends. She’d also save money on gas by moving closer to work.
Today, Emily is grateful to the payday lender for saving her from financial disaster. She’s also proud of herself for being able to stay out of the debt trap so many other payday cash advance borrowers get into. She recommends to all her friends that if they ever get a payday loan, they do their homework, just like she did.
Want to buy a used car but just don't have the funds sat in your bank
account? If so, why not consider taking out one of the many used car loans
available on the loans market.
Used car loans are specifically designed by loans companies to provide
used car buyers with a competitive finance arrangement through which to
purchase a used car. Flexible loans terms are available from used car
loans companies, as well as low APR deals suitable for used car purchases.
Used car loans of up to £20,000 can be arranged on an unsecured basis,
with loans companies offering higher loans amounts if security is
supplied.
Advance plan your used car loans
When buying a used car it pays to do some advance planning and arrange
your used car loan ahead of the search for a used car. There are many
loans companies out there offering loans for used car purchases, so it
makes sense to shop around to get the best loans deals for buying a used
car. Look for car loans that are flexible to your needs and offer a low
APR, so your monthly used car repayments on any loans taken out won't be
sky-high.
As with all types of loans, you should first determine how much you can
afford to borrow on loans to buy a used car. Loans calculators are
available on the Internet and can be used to calculate loan and repayment
amounts in accordance with different APRs. It is important to take into
account other financial commitments too, including other loans, when
calculating the loans amount that you can comfortably borrow to purchase a
used car.
If you intend to buy your used car from a used car trader where they
offer car loans / finance for their used cars, then do make sure that the
loans deal you sign up to is better than the loans deal that the used car
trader can offer. The APR rate is the critical thing here. On car loans
tailored for used car purchases the APR rate - i.e. the rate of interest
you'll pay on top of the used car purchase price - can be as low as 6%.
Finance loans deals through used car traders may have a higher APR, so
pushing the total cost of buying a used car up to an unacceptable price.
One final thought. When negotiating the price of a used car with a
trader, they may accept your lower offer providing that you take up one of
their loans to finance the used car purchase. If this is an option then do
check the terms and conditions of their loans carefully, paying special
attention to the loans APR rate, as the savings from your negotiation on
your used car may not be as attractive as first imagined when you consider
the final costs attached to their loans!
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