Ask the Loan Shark: How Much To Borrow?

Part Two in an informational series on payday/short-term loans

Q: I need to take out a short-term loan, and I qualified for $400. I really only need $300, but that extra $100 would be nice for some spending cash. What should I borrow?

A: The absolute bare minimum. If you don't really need that extra $100, why borrow it? In fact, before you even go to the loan business, sit down and figure out everything you need to borrow for. Make sure you're not adding in unnecessary items, services or expenses. Call the company ahead of time and ask what their interest rates are so you know what the payoff will be on your due date. Make sure you can afford to pay it back before you even take it out. That extra $100 could end up costing you anywhere between $17 and $20 more come your due date. Can you really afford that?

Also, ask questions. Sometimes the company you borrow from won't clearly explain the terms of the loan, leaving you high and dry when it comes time to pay off. Know if you have extension days, if you can renew or refinance the loan (and how many times if so), your full payoff amount, and your due date. Don't leave without knowing exactly what you're getting into, and if you have questions after the fact, call the company before you are due to pay off. Don't get stuck in a situation you can't get out of because you didn't get all the information ahead of time.