You found yourself in a jam and needed to borrow some cash to get out of it. Your credit isn’t stellar, your income is fair, and you don’t have much collateral so, getting approved for a bank loan was out of the question. You did a quick internet search on borrowing for bad credit and came across payday loans. It seemed convenient enough, fill out an application, submit banking details, and wait for approval. You got the cash, handled the problem, but now you have a bigger problem – getting rid of those payday loans.
The Vicious Cycle
What most borrowers don’t comprehend is that they can fall into a debt trap with payday loans. These are short-term loans that are designed to last 14 days. They have extremely high interest rates and advance fees that are tacked on every 14 days without fail. If you don’t have the money to pay the loan in full on your next payday, keeping up with fees and penalties sends you further into debt. You’re paying $30 or more for every $100 you borrowed, plus extension fees, bounced check fees, and you’ll still be responsible to pay the loan plus interest at your earliest convenience.
So, what sounded like a good idea when you were struggling a bit turns out to be a disaster. What can you do?
Get an installment loan – short-term installment loans are alternative payday loans. They have all the perks of being easy to qualify for and quick cash deposits, but you have more than 14 days to pay the loan back in full. Since you can get approved for as much as $1250, you could use the funds to pay off the payday loans and then pay simpler and more affordable monthly payments on the installment loan.
Contact the lender – if you’re having trouble paying your payday loan it is ideal that you contact the lender. The longer you wait, the more strict they will become with their collection efforts. Explain your circumstances and see if they can work out a better arrangement with you. They may even be willing to remove some of those fees to get the principal balance caught up.
Payday loan debt relief – you read that right, borrowers have been having such a hard time with payday loans that there are now debt relief services catered especially to those needs. Payday loan debt relief providers will work with the agencies to stop the accumulation of fees and generate small monthly payments to help you get out of debt faster. Their services are generally going to cost you so don’t forget to factor that into your budget.
Likely the best way to keep yourself out of this nasty payday loan cycle is to stop borrowing from these types of lenders. They lure you in with attractive lines like no credit check and fast approvals, but once you’re hooked it can be hard to get out. The high-interest rates and fees along with bounced check fees from your bank can make it hard for you to put a dent in the principal balance. It can take years and hundreds of dollars if you don’t act fast. Use the above-mentioned tips to get out of a jam now, and make sure you manage your finances accordingly so you don’t ever have to go that route again.