Next Day Loans: When to Use Them

John asked us the following question:

“The great news is I got a job again and I can start repaying my loans and still meet my monthly bills. Reading the news, I can sense a general positive sentiment on our economy. In fact, in the first quarter the government has reported that unemployment rate is down to about seven percent. While I’m not one to go on spending spree like there’s no tomorrow, I feel like I, and the rest of America, deserve a break from the recession stress. I’m thinking of taking those next day loans to fill up my house now that I’m more stable. Banks can’t give me loans because I’ve defaulted when I was in and out of job for two years. This doesn’t mean I’m compromising my loan payments; I just have enough money to get more loans so I can get the stuff I want now rather than later. Is it truly safe now to get more credit barring any major calamities and economic instability?”

– John D., 32, MO

Your question has touched on two critical issues that have been plaguing Americans lately: the lack of saving and investment habit and job security.

First, the popularity of next day loans sounds like a comeback of times when Americans could live off in credit without fear of defaulting. To be blunt, that privileged era has ended. What is worrisome, as you’ve implied in your question, is that most Americans do not save enough but rather spend, which can lead to a retirement crisis as reported by CNBC. And next day loans feed into this spending culture.

Second, job security today sounds more like a myth or a memory, depending on your generation. Where before good education guaranteed a good career, today even those with PhDs and MBAs had been struck hard by unemployment. Worse, blue-collar Americans were hit hardest. If you belong to this group, you may be part of the vanishing breed spelled out in this FinancesOnline.com analysis.

Yes, you’re right to feel good about getting out of the recession. But it doesn’t mean we’re safe, to answer your question. Even economic experts are finding it hard to predict outcomes, and Huffington Post seems divided whether we’re moving in or out of another recession.

Unlike when America used to dominate global economy, today, there are more pressures outside that can sink our economy at any time. Outsourcing, manufacturing loss, income inequity, these are some of the issues that will always hang over your job. Keep these factors in mind when applying for next day loans.

We discourage people, even those in the UK and Canada, to use next day loans to buy non-essential items. But if you’re convinced that an Xbox is a critical part of your lifestyle—we all go through self-justification—you can still put next day loans to a better use. Pay back loans with next day loans. The faster you’re done paying for backlog loans, the faster you’ll free up some of your money to buy non-essential items. If this sounds like a bad idea, it is, but no worse than wasting next day loans on items that you can put aside for a while. Using next day loans to pay up past debts at least pushes your credit score forward, not backward.

As a final note, please consider the risks inherent to next day loans: higher interest, penalty charges, hidden fees and the risk of piling up more debts. In our experience, next day loans are best reserved for emergencies, which your situation is not.

Your best option is to wait out until you’ve paid all your loans; then you can start buying non-essential items with cash, while putting aside some savings to cushion yourself from another recession, which, make no mistake, will happen again sooner than later.

By Astrid Eira

Astrid Eira is a resident B2B expert of FinancesOnline, focusing on the SaaS niche. She specializes in accounting and human resource management software, writing honest and straightforward reviews of some of the most popular systems around. Being a small business owner herself, Astrid uses her expertise to help educate business owners and entrepreneurs on how new technology can help them run their operations. She's an avid fan of the outdoors, where you'll find her when she's not crunching numbers or testing out new software.