Have you ever looked into your options for taking out 500 dollar loans? If you have, then you may be a little confused as to why bigger banks and lending institutions usually don't offer these types of loans (especially if you have bad credit or no credit history). You would think that taking out a small 500 dollar loan would be easier that taking out something larger, like a 50000 loan - but at times it seems like this is not the case.
So what can you do if you need a loan for 500? Well, there is a certain loan industry that exists to help you get such loans - the payday loan industry. While this industry is often scrutinized, when used properly these loans can serve a very functional purpose in our economy - supplying capital to those with bad credit and not many other options.
The main reasons why 500 loans with bad credit have such a bad repore is that most people do not use the loans properly and end up putting themselves into financial trouble instead of getting them out of financial trouble. Don't be one of these people! It's actually fairly simple to not get caught into this trap, you just need to know how to not get caught. Below are 3 great ways to not get caught in the payday loan trap:
Tip Number 1 - Pay off the loan ontime, in full. Do not extend a payday loan.
Only take out a 500 personal loan for the one or two weeks that you originally sign for. Many people get themselves into trouble by extending these loans (many institutions make it very easy to extend the loan and even suggest subtely that such an extention can be a good idea, as you effectively have to pay the current interest and start a new loan). If you extend the loan you will pay too much, so don't do it if at all possible. Obviously, this option is better than going into default, but it can start a vicious cycle of not being able to make the payments and adding up the interest and other costs.
Tip Number 2 - Realize the costs associated with the loan, and make sure you can afford those costs.
Average costs for payday loans are above 450% APR. I have seen loans that are double that! As such, they are the most expensive form of financing in the industry. What is means is that to borrow $500 for two weeks, you will pay around $75 - $100 to borrow that money in interest and other fees. So yes, you do pay for the fact that there are no credit checks required to get the loan.
Tip Number 3 - Only use such loans for absolute emergencies when there are no other options.
Because of the costs (as detailed above), if you take out too many payday loans then there is no way that you will be able to stay/get ahead financially - and this is where most people blow it. On average, people who take out payday or cash advance loans do so 8 - 12 times per year! This is not the way to financial freedom, but rather is the way to financial ruin. Again, payday loan can ve a viable option for emergencies, but you need to budget and save you don't find your self in those emergencies again.