With a simple keyword search on ‘payday loans’ you’d find numerous online lenders waiting for prospective clients to rip off.
You may have taken a payday loan without having much information about it, and now there’s every probability that you are having a tough time finding your feet.
Don’t feel bad, in this post you’ll find out the wrong approach you may have taken toward payday loans. And hopefully, apply the right approach to regain your financial freedom.
The Cost of Payday Loans
Payday loans are way expensive, with typically high-interest rates and very short repayment periods.
Depending on your financial need, you can get a:
- 24-Hour Payday Loans
- Two weeks of Payday Loans
- 30-Day Payday Loans
- Instant Online Payday Loans
- Cash Advance Payday Loans
5 Signs You’ve Been Handling Your Payday Loans Wrongly
Below are a few signs you’ve been handling your payday loans all wrong:
Taking Payday Loans for Day-to-day Expenses
A Payday loan is meant for emergencies and not for day-to-day activities. Should you take a payday loan for usual expenses, use it well and put some plans in place to pay back as soon as possible. You can’t be spending a loan like it’s your income. That’s very wrong!
Once you take a payday loan, fix the financial issue and start saving up to pay it back. Don’t just relax and wait for the loan deadline to plead for an extension.
Getting Rollovers On Your Payday Loan
According to the Consumer Financial Protection Bureau, more than 80 percent of borrowers who rolled over loans owe much more than the amount they initially borrowed.
For a payday loan, the more extension you get, the more the interest charge and penalty fee accrues. Remember the saying, “a stitch in time saves nine“. With payday loans, the earlier you repay your loan, the better.
The question is, how do I pay back my payday loan without hurting my credit or personal finance?
Here’s what you should do:
You have to earn more income. You should engage in a side business, or work extra hours to increase your disposable income.
You can also sell some of your possessions, and cut costs on some expenses that you can do without. Expenses like eating out, cable subscriptions, entertainment, and others.
Taking Multiple Payday Loans for Large Financial Problems
When you take multiple payday loans to settle large bills, then you’re setting up for a big debt trap.
Do not abuse the purpose of a payday loan. Payday loans are usually capped at $500—for simple expenses that can be repaid in 2 weeks or a month. When in a large financial mess, take a personal loan instead of a payday loan.
Not Consolidating Your Payday Loan Debts
Debt consolidation will help you merge multiple payday loans into a single loan, and break it down into a simple repayment plan. You’ll then begin to make installments every month for a lower interest rate.
If you stick to this repayment plan, you can save some money while settling your debt.
And most importantly, you will save your finances and credit score from further damage
Conclusion
Payday loans can be a handful during situations of financial emergency. However, it can be catastrophic when not used in the right way. Thankfully, now you know a few ways you’ve been handling your payday loans all wrong. You can do better with your finances and gain the financial freedom you deserve.
