The answer to this question is not cast in stone. You can get a better perspective on it by comparing several options open to you.
Payday loans are short-term loans with high-interest rates. The approvable loan amounts are usually small. Therefore, they may not be the best option if you need money to finance large purchases or cover a high medical bill. Their high-interest rates may also make you rethink. You are likely to be charged a fee of $10 to $30 for every $100 borrowed. Many payday lenders charge exactly $15 for every $100.
Assuming your budget is tight and you are unable to pay back the money within the agreed loan term, you can request a rollover if your state’s lending laws permit. But a rollover after a two-week term, for instance, will cost you another $15. That is, you could be paying up to $30 for a $100 loan after four weeks and up to $300 to borrow $1000 for 1 month.
Here are some factors that may tilt your decision in favor of a payday loan or its alternatives when you need money urgently:
Processing time: Payday loans are processed pretty quickly, sometimes within 24 hours, depending on the borrower’s bank and the lender’s funding policies. Bank loans, in comparison, take several days to process.
Credit score: Most payday lenders do not check applicants' credit scores in assessing their creditworthiness. If your credit rating is low and you need to cover an emergency, a payday loan may be more accessible to you than other loan options.
Interest rates: The interest rates on payday loans are quite high. So, you may consider other choices. This ranges from alternatives with no extra cost, like nonprofit organizations, community groups, and employers, to those with comparatively low-interest rates, like credit unions and personal installment loans.
Approval rates: The approval rates of payday loans are quite high compared to that of bank loans and loans from traditional financial institutions. Generally, you stand a high chance of getting a payday loan if you meet the statutory basic requirements put out by the Consumer Financial Protection Bureau (CFPB) and the lender’s specific requirements if any.
Last but not least, there are non-loan options you could try too. For a token, you could carry out surveys on survey websites, take up freelance gigs on platforms like Upwork and Fiverr, get a side hustle, or even sell off unused items that have taken up so much space in your garage.