If you have felt the pinch of taking a payday loan, you probably know that payday loan debt is not the best financial situation to be stuck in. But what do you do when your salary is yet to hit the account, and an emergency occurs?
With the disadvantages of payday loans in mind, you mind opt for another option. There are several other possible places you can borrow money from. They include the following:
Borrow from a friend or relative
Seeking financial assistance from family or friends is not ideal, as most people are are contending with personal financial problems of their own. It comes down to assessing your circle and picking out those that are likely to trust you with their money, those that will not judge your financial situation for the rest of your life or, those that are likely to charge less or no interest at all.
While many people resolve to borrow from strangers, borrowing from the people closest to you could save you a lot of headaches in some cases. You can negotiate the interest rate and instalments that suit your financial ability.
Additionally, this kind of loan cannot affect your credit score, even If put in writing; however, failure to stick to the agreement may affect your relationship and tarnish your reputation with family and friends.
Get a Side Hustle
How urgent is your emergency? If you have some extra time, you can find an additional source of income. A side hustle can also be part of your “Plan B” if a lender does not come through. The best part is that the extra cash save you from debt while sorting out your finances.
Here are examples of side gigs to consider:
- Search for online jobs
- Rent out Your Car
- Sell clothing and other items
- Online Tutoring
- Become a contact tracer
- Become a babysitter, etc.
Join a Lending Circle
A lending circle refers to an arrangement whereby a group of people contribute a set amount within a certain period. For example, five people may decide that each member should contribute $50 monthly. The members take turns taking a total sum of $250 so that each person is assured of getting the same amount once every five months.
This concept has existed for a while and has saved more from debt or helped them make financial moves they may have yet to manage from their income. If you find it hard to save, consider this option.
Lending circles can also come through during emergencies depending on the type of arrangement. If you are lucky, you can ask to skip or cut the sequence to sort out your emergency or borrow from the group at a lower interest rate or no interest at all.
Consider a Cash Advance from a Credit Card
A credit card cash advance is a short-term loan offered on your credit card. The lender allows you to borrow up to the card’s cash advance limit but not the full credit limit. While this may appear like an easier way out, credit cash advances also have relatively higher interest rates.
The APR for cash advances is usually higher than for purchases made directly from a credit card. This additional cost is due to the withdrawal fee- usually, 3% to 5% of the amount borrowed- charged on cash advance. Regardless, the low-interest rate is better than the 100% to 700% interest rates you are likely to incur on a payday loan.
Consider Credit Unions and Small Loan Companies
Credit unions are regulated by an agency known as the National Credit Union Administration (NCUA). They offer affordable and low-interest Payday Alternative Loans(PAL), which could be better alternatives to high-interest payday loans. Credit unions and small loan companies may offer small loans at very competitive rates than payday lenders.
Payday Alternative Loans can be useful in avoiding payday loans or paying off an existing one. They also offer the advantage of longer repayment periods. Also, a single PAL lender may give multiple loans –up to three- within six months as long as one does not roll over or overlap the other.
Solid Ground Financial pairs you with the best credit advisor, who guides you on the best way to consolidate your payday loans and how to avoid such high-interest loans in future. Our goal is to safeguard your financial stability so you aren’t consumed by debt and accompanying worry and to provide you the right knowledge to achieve a better financial life.
How Does the Government Regulate Payday Loans?
Payday loans favor the lender more than the borrower. These loans have gradually evolved into a booming business for those who take advantage of borrowers, but they have a reputation for ‘milking’ more money than is reasonable via their higher interest rates.
While the main argument against payday loans is their high-interest rates, most lenders settle on an average APR of 398%, making the quick cash offer worth a second thought. Most consumers are trapped because their financial budgets are already stretched, leaving no room for these high payments.
The government regulates this market through the Consumer Financial Protection Bureau (CFPB). The agency is tasked with formulating rules that sustain the consumer finance markets. However, some regulations vary from state to state, with about eleven states restricting payday lending altogether.
The jurisdictions that allow payday lending enforce loan maximums (ranging between $300 to $1000) and the duration of loan terms in some cases. They also have varying specifications on how finance charges can be assessed.
Therefore, it is wise to find out if payday loans are legal in your state and the statutes put in place to protect you as a consumer. Statistics show that about 75% of Americans favor further payday lending regulations. If you are one of them, you will certainly appreciate the efforts to get people out of these arrangements via payday loan relief options.
Payday Loan Relief champions better financial control by helping more people through our payday loan consolidation plan. Our team of seasoned financial specialists at Solid Ground Financial will take their time to study your financial situation and offer the best solution so that you can pay less and worry less about your finances.
How do I Qualify for a Payday Debt Consolidation Plan from Solid Ground Financial?
At Solid Ground Financial, we aim to empower our clients by using what they have to take care of what they do not. Our professional assistance is aimed at reducing the number of debt into one affordable loan and equipping you with the right information to get you out of the financial quicksand faster.
The primary considerations for payday debt relief include the following:
- Proof of income or financial stability- a payday debt relief plan consolidates two or more high-interest loans into one low-interest and more flexible loan. The new loan is more or less personal; therefore, we will need to evaluate your income to develop the best repayment plan. Some proofs of income may include pay stubs, utility bills, tax returns, or W-2s. These documents also help the lender determine if you are a good financial risk.
- Credit history- When applying for a debt consolidation program, the lender must perform a credit check to review your payment history and credit report. It is worth noting that this request is recorded on your credit report leading to a hard inquiry that affects your credit score. However, the impact is minimal, usually causing a drop of five points or less.
- Equity- When you consolidate small loans into one, the single debt adopts the features of a personal loan, including equity. Whilst most small loans are unsecured, you may need collateral to qualify for debt consolidation.
Solid Ground Financial poses reasonable qualifications to fast-track your financial situation. Our certified counselors will help you understand these qualifications to settle your outstanding payday loans as soon as possible.
Our professional financial advisors take you through the process step by step while giving you the perfect intervention between you and your lenders. We negotiate on your behalf and partner with you towards developing better financial habits.
