The ten golden rule of cash advance lending – part 3

Part III

The thing about payday loans is that, even though they are not exactly what I’d call great, they are real. As long as you follow some safety precautions, you can turn the risk borrowing money into a good thing.

7. Know the risk

Speaking of risk, let’s talk about what you should avoid when making payday loans. Another thing I like about this type of loan is that the risk is fairly straightforward. The risk, although it could be quite disastrous, is not caused by some outside factor. In the average, the dangers of payday loans are self-incurred. One thing to note is that, rolling over a current loan is never a good idea. Nevertheless, people just love to do it.

8. The better judgment

At first, it would seem quite obvious that the payday loan borrowers have no better judgment. If they even do, they mostly just decide on things despite that good judgment. However, looking deeply into the nature of payday loans, you’d realize that it’s quite difficult not to make a wrong turn. One very important rule is to never borrow more money than you can pay. Set a realistic limit to the money you can earn in the span of time before your loan gets due.

Rules 9 and 10

Let’s look at an example situation (which we will also use for the last two golden rules).

Say this one person that you know has loads of medical bills to pay. This other person that you know wants a new car, because the older one broke down. Who do you think is more needy at the moment? It would seem to you that the person with medical bills to pay is. However, if you take into account the situation of the of them, you’d find out they are just as needy. Say, this other person needs a new car because he goes to work every day, and short delay can cause lots of loss money. In that perspective, they both need the money. Now, the question is, is it necessary to make a loan? That’s what we should try to answer.

The last two rules will be more effective if you discover them for yourself. Go through the example situation given above and then try to answer these two questions:

For whom should you give a stronger advice to make a payday loan? For whom can you give the advice that another type of loan might still be an option?