Short Term Payday Loans

In many cases, if you can avoid having to borrow money, you should – most people would agree with that.  However, there are definitely some cases where a short term loan of a limited amount of cash is justified.  I thought I’d share a few of those here.

1. Sudden Emergencies.  We’ve probably all been in unfortunate jams – blown tire, water heater breaks down – and having access to quick cash would be a life saver.
2. Unexpected Expenses.  Ever go to the dentist for a cleaning only to find out you’ve got a cavity?  Or how about a phone bill that’s higher than expected? These situations are less urgent than an emerency, but often leaves you flat-footed and needs to be taken care of quickly.
3. Small Bridge Loan.  This is the classic “ran out of money before I ran out month” problem, and having access to short term loans is a bit more appealing than going hungry.  But be careful – if you find yourself in this category for many months in a row, it’s a sure sign you’re living “above your means” and needs some active management to get things back in line.
4. Family Security.  Some would disagree with this, but I personally think that every member of your family who is out alone needs to have a cell phone for personal security reasons – and for parental peace of mind.  If you don’t have the extra cash or prime credit to get phones, I would personally borrow money to outfit my family with mobile phones.
5. Building A “Sub-Prime” Credit File.  Everyone has a credit file with the “big three” credit reporting agencies, but short term lenders don’t look at them – if you had a good “prime” credit score, you would just borrow from a bank.  But did you know that there are credit reporting agencies for “sub-prime” creditors?  It could be a good idea to start establishing some history with one short term lender (one with flexible repayment options, APRs as low as possible, and great customer support) just so you have a “rainy day” source of short term loans when needed.  Start small — a $100 loan is a good start — get yourself on a payment plan if one is offered, and pay it off over time.  Then do it again, at $200, again at $300, $500, etc.

Just one caution with short term loans:  only work with one lender if at all possible.  Why?  Because just like credit cards, short term loans are a slippery slope and once you have two lenders, there can be a strong urge to start “robbing Peter to pay Paul” and that’s the beginning of a very bad story.

So – short term loans do have their value, even if you don’t need them right now.  In today’s ever-changing economy, it would be a good idea to have a a back up plan for life’s little surprises.