4 Situations Where a Payday Loan DOES Make Financial Sense


It is undeniable that payday loans have received a lot of bad press over the last few years. But this is arguably down to a small number of unethical businesses pushing the boundaries of financial legislation in pursuit of profiteering from occasionally desperate individuals.

Of course, payday loans are not always the best option when you are looking to secure financial support, but they can be a good option in several situations.

In this article, we walk you through four situations where a payday loan DOES make financial sense.

When you need the money quickly

Sometimes unexpected bills or expenses can catch us by surprise. Although it is always a good idea to put away a little money for a ‘rainy day’, for many this isn’t achievable, or the expense far outweighs the emergency money you have been able to put aside.

Although all options should be considered, you can take out a payday loan to cover these unforeseen and essential expenses in the short term until you have earned the money you need to pay it back.

When you only need to borrow a small amount

Due to the short term and speedy nature of a payday loan, interest is often high. For this reason, it is best to only take one out when you need a small about of money for a short time. 

By borrowing only the amount which is essential you ensure that you are not paying unneeded interest. When you are borrowing larger amounts, it is always preferable to secure more favourable interest rates through other means such as a bank loan or credit card.

When you can pay it off on time, in full

You can easily get caught out with payday loans if you do not have the resource to pay it back in full (plus the interest) in the agreed period. Although you will rarely have the cash to pay off the loan upfront, ensuring that you are guaranteed the resource to pay it back will limit the risk of getting caught with additional charges.

Failing to make the payments is likely to damage your credit score.

When other options are not available to you

For those with a poor or limited credit history, payday loans may be the only way to secure funding when it is needed. Using this type of service could also be a good way to improve your credit score, but only when you make the agreed payments to the agreed deadlines.

Even if payday loans are your only option, it is critical to only use them if you can make the payments, as failure to do so will likely result in further damage to your credit history. Payday loans are not always the answer when you need to get hold of cash. However, there are some situations where taking out a payday loan can make financial sense. Understanding how much you will be expected to pay back and when you need to pay it by will help you decide whether a payday loan is the best option for you.


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