A payday loan could be just what you need when you are faced with a short-term financial emergency that your paycheck simply won’t cover.

 Imagine that a family member suddenly needs expensive medical treatment, or that the car you depend on to get to work requires urgent repairs. You don’t have enough money saved to pay the bill, and your credit card is maxed out. The bank won’t help you out either since your credit score is not looking too healthy right now.

Fortunately, as long as you have a bank account and a regular income, you can get a payday loan to tide you over until your next paycheck – provided they are permitted in your home state, of course.

It is important to remember that this is only meant to be a short-term solution to an acute cash-flow crisis, and not a way to supplement your salary on a regular basis.

Here are 5 Good Tips on How to Manage your Payday Loan if you must get one:

1. You need to know how to manage your payday loan responsibly, so that the fees don’t start to stack up and sink you even further into debt. Remember that you have to pay a new fee each time you roll over your loan (usually every two weeks), so the longer you borrow for, the more you have to pay. If you convert the fees on a payday loan (typically $15 per $100 borrowed, for each two-week period) into an annualized percentage rate (APR) you arrive at a hypothetical (and eye-watering) 391% interest rate on a year-long loan.
2. Mark your calendar so you know exactly when your payday loan is due, and plan ahead to put aside the cash you need to repay it. Aim to pay off the loan as quickly as you can. If you find that you do need to extend, try to borrow a smaller amount the second time around – this will keep the interest costs down. Each state has its own regulations about the number of times you can roll over a payday loan, so make sure you know the laws in force in your home state. Certain states have banned extensions altogether, and require that you pay your loan off in full at the end of the term.
3. You should be careful of taking on more than one payday loan at a time – in some states this is illegal in any case. The only possible exception to this rule is if you are due to receive a large sum of money that will cover the repayments and leave you plenty for your ongoing needs. In that situation, you might be able to justify borrowing from two different lenders if the maximum permitted loan from each is too small for your requirements – but never otherwise!
4. Make it your firm policy not to sign up for a loan unless you are 100% sure you can pay it back on time. If you applied for your payday loan online, when the due date comes around the lender will debit your bank account for the amount you borrowed plus the fee, unless you request an extension ahead of time. If you don’t have enough money in your account and the debit doesn’t go through, the lender might also decide to sue you – and that is a situation you want to avoid at all costs. Alternatively, you might be lucky enough to have an overdraft agreement with your bank, but remember that you will still be charged a hefty fee.
5. Lastly, make sure you only borrow to cover a genuine financial emergency that you cannot fund out of a single paycheck. No matter how easy it is to obtain a payday loan, don’t be tempted to get one so you can go on vacation or buy the latest gadget or fashion accessory. A payday loan is not a realistic way to solve a long-term financial problem either, given how quickly the fees add up. Nevertheless, as long as you manage your payday loan wisely you will find it to be a real friend in need.

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