The financial situation hasn’t yet recovered after the huge economic crisis from the past years and the US is no exception from the rest of the world. The paychecks are low, while the everyday life becomes more and more expensive. For many people is not an easy task to cover all the expenses from one paycheck to another and most of the times, savings are out of the question. Even if things are not easy during the year, when you try to cut off the list all unnecessary expenses, money problems become difficult to deal with during the holidays. Christmas is more about family and friends and less about the gifts. Still, the winter holidays come with a long list of expenses. Even if you don’t make big plans, preparing a special meal for everyone and putting some gifts under the Christmas Tree requires an extra budget, which is not always available. Under these circumstances, a loan is a solution most people turn to. But when your family and friends are dealing with a similar financial situation, the payday loans seem like a good idea.

Financial reports show that around 8% of Americans can’t finish paying the debts made last Christmas. This season is the most profitable for payday lenders, and to avoid being part of these statistics next year, you must be careful what kind of loan you take and what you sign up for. Before applying for a loan thinking you will deal somehow with paying it back later, you must learn what these loans actually imply. Here are some tips on short-term loans.

What is a payday loan?


Payday loans are short-term loans provided by official and legit lenders, usually with a very high interest. They are named this way because they must be closed by the next payday. This type of loan shouldn’t be taken easily because they come with a series of strings attached.

Even if payday loans represent the last alternative when it comes to obtaining some extra cash, they don’t necessarily mean that they are the worst possible decision. It is important to be fully aware of what you are getting yourself into so you are prepared to manage the situation. This type of loans is not legal in every state because if the rules and regulations are not strictly applied it won’t take long before a person’s financial situation will spin out of control.

Who is allowed to offer payday loans?

It seems that payday lenders are the most popular people among the credit providers, even though they are far from being the cheapest because those who otherwise would be rejected by mainstream lenders can obtain this way a credit card or a loan. Regardless of how desperate for money you are, always make sure you check out the lender. Before talking about the advantages and disadvantages of a payday loan, it is important to know where you can officially ask for such a financial help. You can apply for this form of loan both online or in-store, but no matter the situation, the same rules, and regulation apply.

First of all, the law is very strict when it comes to legitimate payday lenders. This type of financial institutions must apply for a series of licenses. Working with these companies ensures you the protection of the state regulations regarding the interest rates, various fees, term and conditions so you will not end up losing everything you own because of a small loan. Still, compared to the banks these lenders have less strict criteria when it comes to lending money.

Usually, you are rejected by mainstream companies if you have a low income, you have another credit, or you receive government benefits, meaning people who are most in need, are denied. On the other hand, payday loans come with the highest interests, without overstepping the boundaries set by the law.

Short term loans or payday loans must be taken very seriously and after a lot of thought and planning. If you exhausted all other possible options, family, friends and banks and you are in genuine need of financial help you can start looking for legit lenders and find out which one has the lowest interest rate. It is not recommended to take loans for leisure or frivolous things.


Payday loans are very easy to obtain, which doesn’t necessarily mean it is a bad thing.

How to spot a dishonest lender?

It’s not too difficult. All you have to do is use a little logic. First of all, a lender is interested in finding out if you can pay back the loan and the interest, so it has to ask you some evaluation questions about income, other existing debts or current expenses. Based on this information it has to make a reasonable and impartial judgment on the applicant’s financial situation. If the lender is eager to make you sign the contract without showing much interest in your evaluation, chances are this is not a legit lender, and you should walk away.

There are three steps you should pay attention to before enrolling for a payday loan, and they are:

  1. Contact details – it is always easier to apply online for a short-term loan, and the website can provide some clues regarding the lender’s good intentions. The first red flag should appear on the contact page if there is not displayed a physical address, a phone number or a live chat possibility. If you only have available an email address or a contact form you should try to obtain further details this way and see their approach. A legit lender doesn’t have reasons to hide contact information.
  2. Fees and interests – a legit lender will explain everything you need to know about the amount of money you have to pay back. You don’t have to shy away to ask all details you want to know so you can plan the payment. Read the contract carefully and make sure all charges and fees are clearly A lender who keeps changing numbers and avoids righting them down should give you reasons to doubt its intentions.
  3. Accreditation from Better Business Bureau[1] – this is a non-profit organization which works to identify the trustworthy business for over a century, and all respected business providers across the USA have such an accreditation.

Once you spotted a legit payday lender and you checked some details about its history and customer review you should take the next step and understand precisely what you are getting into and what to expect from this type of loan. Payday loans are a controversial financial option, which has both benefits and disadvantages. If you are not sure you can pay them back, you should not apply for payday loan. This type of short-term loan is not a way to cover other debts either. Before signing the contract, here is a list of pros and cons for these loans. Read it carefully, do the maths and then make a decision.

Payday loans – Pros for getting resources for a Merry Christmas

If you don’t see any other way to obtain some money for the holidays, here are some reasons why this option could be taken into consideration:

They are processed and approved very fast

Payday loans are not high amounts of money because they must be paid within 30 days, so the client assessment doesn’t last too long. It only takes a few minutes to obtain the money once your solicitation is approved. If you chose to apply in-store you could leave with the money into your bag, or if you apply online the funds will be transferred into your bank account, and you can withdraw them as soon as they are available. It usually doesn’t take more than a business day. Due to the popularity of these loans, most banks offer a speedy payment service which allows payday lenders to make a fast transaction and you get access to the money even faster.

You can use the money for any purpose

Unlike the traditional credit offered by the banks and other mainstream financial institutions which specify the purpose of the loan, the payday lenders don’t stipulate in the contract what is the destination of the money. Of course, they must be used for legit reasons. You can buy presents, pay bills or prepare a meal for the whole family, anything you want, as long as you pay it back within 30 days.

People with poor credit record can obtain them

The main reason people take on this kind of loan is that they are denied access to the conventional ones. Often those who need most the money don’t stand a chance to obtain them from the bank due to a low credit score.  But this is not a reason for payday lenders to deny your application. All they require from you is a steady income, a checking account and an ID officially issued by the state.

Payday lenders are professional institutions

This type of financial company exists for more than two decades, and most of them have grown from small businesses into a franchise or large chain companies. As a result, both the physical and online stores look and feel like mainstream financial institutions. Also, the employees are professionals with studies and experience in finance so you can obtain complete and well-informed guidance.

The state regulates payday loans

Strict laws and regulations guide this line of business. As long as you make a deal with a legitimate lender you are protected by the state because the charging limits are clearly stipulated and you can quickly check them out, even if they vary from one state to another.

Many options to choose from

There are many companies which offer payday loans. All you have to do is find the one with the lowest interest. There are even specialist websites to help you find a legit lender that suits your needs within your zip code area.

Easy to apply for, even online

You don’t have to find time in your busy schedule to go to a physical office and ask for a loan. Many payday loan companies have professional websites which explain you all you need to know about these short-term loans and if you have further questions, you could call the customer care service. You fill in the online form, and within several hours you have the money transferred into your account.  Make sure to read all the fine printing and ask all the questions you need before you agree on anything.

Good payers are given more money

Once you pay back your first loan in time, you entered a database and if you continue to apply for these loans the amount of money you can loan will gradually increase. This means that with a good track record you can ask for more money as you have earned the trust of the lender and if you ever need emergency found you have someone to turn to for help.

Even if they have some significant benefits, payday loans are not for everyone, and they must be considered as an option when everything else failed and you must be sure you can pay back in time both the loan and the interest. Otherwise the consequences will completely ruin your financial situation. With the pros already counted, here are some cons regarding this form of loans to consider before applying for some Christmas founds.

Payday loans – Cons for starting the New Year in debt

Borrowing money always has consequences, and before asking for a payday loan you must understand what could go wrong with such a decision:

They have some of the highest interest rates

The sky-high interest is the main downside of this loan. Of all the loans available this one will end up costing you the most. Some lenders apply up to 600% interest. A small loan from the bank or building society should count among your top choices when asking for a loan. Payday loans are the last option.

Expect additional fees

If you didn’t do right the math before applying for the loan and you can’t pay it back in due time, you could also expect to get additional charges as a punishment. Even if the state law established some limits for the interests, they still seem astronomical high for someone who lives form one paycheck to another. You should be very sure you can pay back all the money within 30 days, or you will have to give back a lot more than you expected, and you and it will be challenging to bounce back. The loans can roll over from one month to the next and accumulate even higher debts.

It can reduce your credit rating

All short-term lenders use the services of specialized companies which create a customer rating for credits. If you make it to the blacklist of those who didn’t pay back the loan for various reasons you will find it very difficult to get another loan next time you are in desperate need, as your credit rating goes down. Consider all alternatives before applying for this form of a loan.

Payday loans are not a long-term solution

As the name suggests, they are part of the short-term loans category because they must be paid back by the next paycheck. Even if you get a cash influx to solve the financial crisis, it will not explain the reason which led to it. Sometimes the interest for this loan goes as high as 600% which will only make things go for the worst.

Not all lenders have honest intentions

Just like any other industry, this one also has its “bad apples”. When dealing with money, chances are you meet some charlatans ready to take advantage of you and your needs. Not all lender are mischevious. You have to pay a lot of attention to details and get informed about what this loan means. If something the lender says or does seems wrong, trust your instinct and investigate further before signing any contract.

Take your time to read the terms and conditions stipulated in the contract before taking a payday loan. The interest for them is incredibly high, and it can make it even more difficult for you to bounce back financially. A payday loan doesn’t have the best reputation, and there are other options to consider when you are in need of some urgent money.

Alternative options for borrowing money

If you are not too good with finances, it is better to ask for advice from someone who understands how things work. There are other types of loans you can take when you need immediate cash, but all come with benefits and disadvantages. Here are some options most financial advisors might mention:

Credit unions

They are non-profit associations created to help communities. The rates are considerably lower when compared to payday loans, and if you plan to save money, they offer a good interest as well. The disadvantage is you need to fit specific criteria to be accepted as part of that particular community.

Credit cards to repair your credit score

People with poor credit rating could obtain a credit card specifically designed for them. They have some of the lowest interest of the market, and it keeps going down the more you use that card. Unfortunately, this card can’t be used you pay other debts and have a strict limit, and they have additional fees if you withdraw money from the ATM.

Secured or bad credit loan

This is another form of loan created to help people with bad credit history who no longer are eligible for credit from the mainstream lenders. For a modest interest, they offer access to large sums of money, up to $100.000 for long periods of time, even 30 years and they can be used for a variety of purposes, including paying off debts. The small inconvenience to obtain it is having a property of your own which is used to guarantee the loan.

Guarantor loans

People with bad credit rating but with family and friends with a better financial background can borrow small amounts of money at cheaper rates than payday loans because they could act as guarantors for the debt. If you prove to be a good loaner, you will have access to more money next time. The interest is small, but not the smallest, so make sure you can pay back the money so the guarantor will not be held responsible for your credit.

There are various forms of loans created for people with little financial possibility so you must spend some time learning about them

Should You Get a Christmas Loan?

Asking for money is never easy, especially from family and friends. Sometimes there is no other way out of a financial situation than taking a loan. If those close to you can’t find a way to help or you are just too proud to ask then you should seek another source of income. Payday lenders are a popular choice, but they should not be the first. Even if they offer easy and fast access to an emergency fund, they aren’t a long-term solution, nor the solution to the initial problem.

Christmas is more about spending quality time with your family, but it also requires extra money. Before applying for a payday loan, make sure you understand what it implies and check out the history of the lender, as there are many chances you meet some less than honest people. Payday loans are not the only option you have for a quick solution to a minor financial situation. Talk to a specialist who can recommend the best solution for you. All of them come with strings attached and you must find that one way of getting some money for the holidays without starting the New Year in debt.

Apply for a Christmas Payday Loan