Using Military Pay Loans Responsibly

Military pay loans are an important source of emergency funds for US servicemen and women. As a matter of fact lenders that specialize in payday loans for the military have become prevalent in recent years, so much so that the government and the Department of Defense have enacted laws and regulations that restrict the interest rates being charged by such lending institutions. While payday loans can help military borrowers, it must be mentioned that there are certain dangers where this type of loan can push a member of the US armed forces deeper into a financial quicksand. It is therefore very important that a prospective military loan applicant knows how to use payday military loans responsibly. Here are a few important tips.

Payday Loans are Not for Unnecessary Wants

Most military pay loans are offered in small amounts, typically within the range of $500 to $1,000. With such amounts, lending institutions are able to approve pay loans more easily than other types of loan facilities. In fact, this type of loan is not even required to have collateral. Thus, there is a risk that borrowers may abuse payday loans. If you plan to take advantage of this type of loan, make sure that you have a legitimate or pressing financial need. Sure, you can take out a payday loan for your rest and recreation, just don't go on an R and R every week. Always remember, payday loans are best used as a quick fix for emergency expenses.

Avoid Renewing Military Pay Loans

Many payday lenders allow borrowers to renew their loans when the agreed payment period comes to an end. While this may sound convenient for some US servicemen and women who cannot afford to wait for the next paycheck, turning a payday loan into a revolving loan can put you in a never-ending debt cycle. Financial experts discourage US military personnel, or any borrower for that matter, to enter into an agreement where a payday loan will be automatically renewed by the lender. Such arrangement can put you into deeper financial troubles because your paycheck will most likely be locked in by this type of loan arrangement. So, instead of enjoying the money you have worked for, you have to use it to cover your loan.

Choose Installment Loans over Military Pay Loans

If you really have to borrow money, you will always be better off using installment loans than payday loans. Installment loans are more manageable. Typically, this type of loan has a fixed payment period and no hidden charges. The best part is that installment loans can cost lower than payday loans or credit card debts. Only when you are in a tight financial situation should you apply for a payday loan. A military pay loan should always be used as the last resort. Remember, a payday loan has a higher interest rate even if the amount is small.

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