4 of the Most Common Reasons Payday Loans Are Used

Nov 26, 2020
Reasons Payday Loans Are Used

There are several reasons why short-term loans and payday loans are used, and it’s not to indulge in a one-off expense, such as a luxurious holiday. It’s no wonder why getting payday loans in Western Cape and other areas has become more and more of an option for many people. 

Let’s look at four of the most common reasons payday loans are used.

 

  • Debt Consolidation

 

One of the main reasons people take on payday loans is actually to cancel out another debt. The funds can be used to pay off another company for a different loan. Quick loans for bad credit in South Africa can be particularly useful. It could also go towards the debt from your credit card use. In that case, taking out a payday loan makes perfect sense. This is particularly true if the interest amount of the loan advertised has a rate that is less than what you owe on the other debt. 

However, it’s worth noting that usually, the interest rate displayed is not fully accurate. This is because most bills are generally not included, and it eventually snowballs into a major expense that is difficult to escape. 

 

  • Medical Emergency

 

People who have no health insurance are immediately in for huge expenses that can range from a thousand to hundreds of thousands. The treatment or treatments needed contribute largely to this expense. If the bill is not paid quickly enough, like any other loan, the interest will build up just like it does with any other debt. Having medical issues is easily one of the most significant reasons that payday loans are being used. Of course, the best way is to avoid all these sky-high expenses in general by getting insurance. However, even getting that can get quite expensive and add up in the long run.

 

  • Preventing Humiliation

 

It may seem strange to approach a company for help instead of borrowing funds from family and friends. It seems safer than transacting with a professional lender after all. What commonly occurs is that people feel more comfortable borrowing from a lender. This is mostly due to the funds being borrowed from a lender, meaning that the amount is owed to a business. 

That is instead of having a debt to someone you personally know. A family member or friend may not charge interest, but the cost might very well be more than that—owing money will likely cause friction. In that light, a lot of people would rather handle the risk of substantial interest.

 

  • Redundancy

 

Going through an unemployment period is difficult, and it is most certainly not something anyone would wish on anyone. By default, it is both an emotionally and financially difficult time. There are times when things are so dire that you may find yourself desperately scrambling to get funds together to make ends meet. 

By taking out a payday loan, you relieve yourself of the stress and time spent searching because you get the money fast and without any delay. Additionally, you will be able to continue pursuing the lifestyle you were previously living before you lost your job.

Conclusion

Sometimes, things just fall through, and no matter how well your budget is planned, you still fall short. In times like that, it is imperative to stay calm and check your resources and possible sources of help. There is no shame in approaching professionals to figure out how to best move forward.

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