Payday is generally referred to as the day people get paid. There are many scenarios where it can be difficult to muster up the money for an immediate problem, especially when the payday is far away. In this case, payday loans are very useful as they can provide people with money in the short-term.
How can payday loans be a problem:
Payday loan debt can be a problem for many people for various reasons. Some of the reasons for payday debt being a problem are listed below:
Financial quicksand:
The term ‘quicksand’ refers to something that sinks too fast – in other words, a trap. Payday loan debts can turn out to be a financial quicksand for people because a payday loan has to be paid under two weeks. If people are not able to pay the loan in under two weeks, they are taxed with high interest.
People who use payday loan consolidation companies usually do not fall into this trap. Simply, people who are unaware of the risk laid by the payday loans are sunk into the trap and made to pay way more money than they were lent.
Lenders get direct access to the bank account:
This is not only a financial problem but also a great security risk that payday lenders can get direct access to the lender’s bank account.
What this means is that lenders can take money out of the bank anytime they want, without any advanced warning. Because payday loans are unofficial, there are no official parties that can help you in case the lender decides to take more money out of the bank than they lent to the lender.
Lenders suggest to ‘rollover’:
Another issue that can arise from payday loans is that they can cannonball into a large-scale, high-interest loan in a matter of months. Because payday loan debts need to be paid in a short period, it is already an ineffective method of getting the money.
In very common cases where one cannot return the lent money on time, the lender can suggest to ‘rollover’ another month, essentially exponentially increasing the debt interest. This may sound like a good deal from your lender’s mouth, but the final amount that you will have to pay will be a regrettable decision.
Even though it is not legally possible to take more than two rollovers now, after the new amendment, depending on the duration of the rollover, the average annual percentage interest rate can go as high as 1500%.
Undue pressure:
There is a common misconception among many money lenders that they can press pressure to the lenders using various tactics to get the money out of them. This is legally a crime and can lead to punishment.
However, people who do not use payday loan consolidation generally give in to the pressure and become unnecessarily stressed out. If you feel like your lender is being unnecessarily clingy or seemingly putting more pressure than required, you can always contact the legal authorities.
Using payday loans to pay more loans:
Lenders may suggest getting a payday loan debt to pay off your bigger loans. This might sound like a good idea on paper: you will be able to pay back the payday loan in the foreseeable future anyway. We would like to inform you that it is not. As soon as you are done getting the payday loan, you will have an extremely short period to pay off your payday debt loan or suffer from a big interest rate.
How to deal with payday loan problems
If you don’t know how to deal with payday loan problems, you will need the help of a professional payday loan consolidation company. That’s where Solid Ground Financial comes into play, as a payday loan consolidation service because we offer debt consolidation as well as installment loan consolidation which can help you pay off your debts quickly at low-interest rates, and have no hidden fees. Apply Now!
