It’s Monday morning and you wake up an hour before you normally do because you want to take the dog for a run. You run downstairs and get the leash out of the car.
You can hear the heightened panting of your dog because he knows leash means he gets to go out and play. You are excited as well to start your week off right by exercising.
You decide to run a different route than you normally do because you want to see new things. There is a path just off a major road so you head in that direction.
As you are running along the road you notice a new sign has gone up. This sign is advertising payday loans.
You have heard of payday loans before but you are not quite sure what they do. You forget all about the sign and just continue you on your way.
After your run that morning you get ready for work and hop in the car. As you try to turn the ignition you hear funny noises.
For some reason your car is not working. You do not know what to do because you do not have enough money right now to take your car to the auto shop.
Rent is due on Friday and you have just enough for that. The problem is if you do not take your car in you will have no way to get to work.
If you do not go to work then you will not make any money the next couple days. This is when you remember that payday loan sign on your run this morning.
You wonder what they are all about and whether or not they can help. You call in work to let them know you are going to be a little late thanks to car troubles then grab your wallet and head for the loan agency.
When you walk in you head up to one of the employees at the desk. Upon explaining to him your situation he lets you know what a payday loan is.
These are money loans that act as a cash advance on your next paycheck. This means if you know money will be coming in shortly you can borrow that same amount and pay it back when you get your next paycheck.
This sounds like a good plan to you but you want to know how much it will cost you. He tells you with a $100 loan you will be charged just over a dollar a day.
If this $100 loan was to last two weeks it would cost you only $115. You are not sure this is your best option.
You have considered just writing out a check for the amount in full to both the auto repair shop and your landlord. You figure if they are slow in depositing your check then you could simply run over to the bank when you get your next paycheck and deposit enough money to pay them off.
The problem with this is these checks will most likely get taken to the bank before you are able to get more money in your account and when this happens your checks will bounce. Your checking account will not have enough money to pay off the two checks and you will be charged an overdraft fee.
This fee usually ranges from $25 to $50. It is clear then that taking out a payday loan is a better option.
You then show him a valid state or federally issued ID along with proof of income, like a paystub, and proof of a checking account with your name on it. Upon reviewing these he will have you write out a check for how much you need to borrow plus the fee you will owe upon its expiration.
You will date the check in the future for the day when the loan ends. He will then hand you your money when you hand him the check.
You are then free to go on your way and take car of the necessary expenses you have. He will deposit your check when the loan expires per the date on the check.
Because he will take it in to the bank it is important for you to make sure your next paycheck is in your account by that time. When you act responsibly in taking out a loan you can save you and your bank account from further financial struggles and be on your way to financial freedom.