Often times people look to Payday Loans for quick relief but never stop to realize the long term affect it could have on their financial situation. A payday loan is a short-term loan that must be returned to the lender on the next payday. There are high interest rate associated with payday loans. The amount you can borrow starts anywhere from $500 and can go up to $2000. Always do your due diligence when applying for a payday loan because it can lead to a vicious cycle that your wallet will not be thanking you for. However, if you find yourself in a situation where you can’t pay it back in its entirety, then consolidating your payday loan is an extremely viable option consolidation will combine all of your debts into a single payment that is comfortable and affordable to you. We will be providing other methods to avoid payday loans below, so dive in!
Due to increasingly high-interest rates, a financial gap can occur and make yet another hurdle you must get over. Many people find it difficult to pay back this financial responsibility to cover this gap. According to a financial report from 2012, an average borrower borrows almost eight loans per year and pays $250 to $500 in interest each year. You can easily imagine how borrowers can find themselves in Payday Loan traps.
If the borrower is unable to pay the payday loan on time, the lender would directly check the borrower’s bank account, as agreed upon during their contractual phase. If there is no money readily available within the account, they will charge a heavy penalty upon the borrower. If you get a payday loan time and time again and cannot manage your expenditures, this can and will badly affect your credit score. This can also affect your financial reputation.
Another big issue regarding payday loans is that you have to pay the whole borrowed amount back at once. There is no option for converting it in into small installments; you must pay the entire amount plus interest at the same time. However, if you are looking for help with payday loan, then consolidation may help you out the most with your best interest in mind. Most people are unable to pay the whole amount to apply for the renewal of existing loans or buy a new one.
No doubt, payday loans can be silent financial freedom killers. But people argue if there are any other options? There are a lot of alternatives to payday loans. You have to manage your expenditures gently and control your budget.
If you still can’t manage your finances or debt consider reaching out to a Payday Loan Consolidation company for help.