Payday loans have gained a lot of press in recent years, both in terms of generating a lot of notoriety, and also in the sense of being something that many people have gravitated towards as a potential solution for their short-term financial woes.


Payday loans are a very specific type of lending arrangement. It is important to know exactly what you’re getting into – to the best of your ability – before deciding whether to utilise the services of a payday loan company such as or whether there might be some other approach that you would benefit more from taking.


Here are two essential questions to ask yourself, when determining whether or not payday loans are right for you.


Do you know exactly what you’re getting into? (Do you read all the fine print?)


Many of the most well-publicised cases of payday loans going horribly wrong involve situations where an individual in question was misled as to the exact nature of the loan, and terms of the agreement which might not have been made explicit.


With payday loans, the devil is always in the detail, and it is absolutely and unquestionably essential to know exactly what you’re getting into, to be aware of the different interest rates that pertain, and to know exactly what is contractually considered to be a “default” on payments.


These things are not always intuitive or clear, and you should absolutely not consider taking out a payday loan unless you are willing and able to read all the fine print, ask questions wherever there may be confusion, and to ensure that you know exactly what you’re getting into in the most specific terms possible.


In a more general sense, this is a good rule of thumb to follow with regards to all loans and forms of debt.


How certain are you to be able to repay the loan by the due date?


Because of the fact that payday loans are quickly processed, and typically don’t require the sorts of checks and balances involved in conventional loans, the “catch” is that the interest rates far, far exceed those of the standard loans you will get at the bank.


It might be that the amount that you take the payday loan out for can help you to cover unexpected expenses in the here and now, and that you will definitely be able to pay the loan back by the due date. But this is something that you should be absolutely sure of before you take out a payday loan.


Don’t just ask yourself “will I be able to pay this back when my paycheck comes in,” but go even further. “Will I be able to pay this back even if I unexpectedly lose my job this month? In a pinch, could I raise the money for the repayment from family or friends if it came to that?”


Defaulting on a payday loan is something that you should never consider under any circumstances.