3580677981_b101363282_zPayday loans are more widely used then ever before: with over 70 million Americans unbanked or underbanked, some studies show that up to 30% of Americans use a payday loan at one time or another. Some of them rely on these short term loans on a monthly basis to bridge the gap between paychecks.

All said and done, the payday loan industry generates about $40 billion dollar per year. That’s a lot of loans.

While most people use these loans judiciously, others are a little more vicarious when it comes to borrowing money. Here are a few choice examples of good and bad reasons to take out a payday loan.

GOOD: Using the loan to pay an overdue or unexpected bill to keep a service connected.

This could be for power or heat or a phone bill – if the difference of a few days will result in the loss of service, this could cause major repurcussions in your life, and cause a bevy of additional fees for re-connection. A well-timed payday loan could keep things going smoothly.

BAD: Impulse buys.

In the past, some of the craziest requests for loans have been fueled by a desire to buy a ridiculous luxury item. One person wanted a loan to buy a Bengal tiger, another wanted funding to purchase a dress worn by one of the Spice Girls. Another wanted to procure an antique set of glass eyes. And while each of these items might be pretty cool, it’s not something that justifies a payday loan.

GOOD: Getting your car out of the shop.

No one ever plans for an accident or a breakdown – they always come when you least suspect (or need) them. If you are living paycheck to paycheck, you may not have the ready cash to pay for repairs. And if a loss of transportation interferes with your job, school, or family, it might be wise to use a loan to keep yourself mobile.

4931853307_15171ca8da_zBAD: Trying to impress someone you have a crush on.

This may sound like it’s made up – but every word of it is true. A man was interested in a woman, and wanted to borrow as much money as he could. Not just to pay for the date itself, but so that he could stuff his wallet full of cash and impress her with his money. This is a terrible idea on so many levels, but suffice to say this is quite possibly the worst reason for a loan of all time.

GOOD: A medical emergency, or prescribed medications.

Cars come and go, but can be replaced. Lights and phones can be shut off and cramp your style but not take your life. But when it comes to your health, and the health of your loved ones, really nothing is more important than that. Hopefully you are never in a position to need a loan under such dire circumstances, but some things you can’t put a price on; borrowing money under these circumstances is probably the smartest thing you can do.

BAD: As a business venture, or as a favor.

Believe it or not, some people borrow money simply to loan it to someone else. This can be for financial reasons (they will charge interest to this other party) or for personal reasons (they want to help a loved one who cannot secure their own loan). Regardless of the reasons, borrowing money for another person is a terrible idea. It puts YOU on the hook. Do you really trust this person enough to potentially be stuck with hundreds or thousands of dollars in payments? Think twice!

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