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Online Payday Loans

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online payday loansMy friend Alex, he is one of those people who just can’t seem to get his finances in order; no matter how hard he tries.  I met up with Alex a couple of weeks ago so we could catch up and he could tell me about the new job he had started a couple of months earlier.  Alex was psyched about this new opportunity but was nervous because he was already feeling the pinch of the once monthly pay.  

But that’s just part of Alex’ story.

He was trying to stay current with his bills but didn’t have enough left in his budget to meet his upcoming rent payment after having to pay a $450 emergency veterinary bill for his dog that ate one of his socks, and his next payday was still two weeks away.  As we all know, the bills do not stop coming just because we are low on cash after dealing with an emergency, and, of course, this was true in Alex’s case. Often, Alex has had to rely on credit cards to bridge the gap during times like this, but unfortunately, many late payments and maintaining high balances have had a negative effect on his credit score and left him with the little room before hitting his credit limits. Fortunately for Alex, there are some ways to get that extra cash he needs without having a good credit score. While I was glad to pay for his lunch that day, Alex is too proud to ask a friend for a loan, but we did discuss some of the options he was mulling over until he could get his financial ducks in a row.

Alex’s financial status was such that going to a bank for a traditional loan was not an option.  He did, however, have a few ideas that were outside the traditional loan space.  His first idea was pawning the only two things he owned (other than his car) with any real value, his computer, and TV.  His second idea was to take a title loan out on his car. His third and final idea was to look into online payday loans. We discussed some of the pros and cons of each of these ideas.

Pawnshops are great for buyers looking for a good deal on technology or equipment they don’t want to shell out full retail for.  They are also a great place to go if you are trying to get rid of some old collectibles or that stereo you no longer use. 

Sounds easy enough, but…

For Alex’s needs, I didn’t know if a pawnshop would be the best solution.  For starters, unlike with online payday loans, to get a loan from a pawnshop, you have to bring in collateral with a value that is typically significantly higher than the value of the loan.  As mentioned, for Alex, that would be his computer and TV.  Maybe Alex could use the time without his electronics to read and bone up on his financial literacy, but considering that he is a huge basketball fan, being without a TV with March Madness quickly approaching was less than ideal.

His second idea, taking out a title loan on his car, would seem to be slightly more practical than going to a pawnshop. You don’t have to turn over your vehicle, but like a pawnshop and unlike online payday loans, a car title loan still requires collateral in the form of your car’s title.  However, what if Alex has another financial emergency in the future and is unable to make payments on his title loan?  He could find himself without a car, and living in a town with limited public transportation would mean Alex would have a difficult time making it work and holding on to his new job.

Should Alex apply for an online payday loan?

We finally got around to talking about Alex’s final idea, taking out an online payday loan.  As Alex and I were discussing payday cash advances, it became clear to us both that this seemed like the most logical choice for Alex.

But I know what you are thinking:

Online payday loans can get a bad rap because they tend to have higher interest rates than do traditional loans but for Alex, a traditional loan from a bank was not an option based on his bad credit

Just think about it…

An online payday loan offered Alex the chance to have up to $500 in his account the same day he was approved without having to put any of his personal possessions on the line. 

Since he was looking into online payday loans he would be able to complete a short loan application from home, with no fax required and no credit checks.

You might be wondering what happened to Alex?

I spoke with Alex a couple of days ago to see how things were going since we had met for lunch. He told me he opted to go with an online payday loan to meet his rent obligation.  He did have to pay interest on the loan, but that paled in comparison to potentially losing his computer and TV, or worse, his car.

After Alex made it through the probationary period at his job, he was given a raise and now hopes to put his financial troubles in the rearview mirror.  Of course, none of us can avoid financial emergencies forever, but for Alex, he knows that online payday loans are the solution he’ll use if he is ever in the same sort of predicament in the future.  And, for the record, his dog is fully recovered, and Alex is doing a better job of keeping his laundry out of reach.