Getting a Payday Loan these days is very easy. By just a few clicks, you can have up to $1000 in your bank account. This process is one of the best and fastest ways of taking a loan but 14 days can sneak up on you pretty quick. A Payday Loan requires full payment plus fees 14 days after the loan has been issued, otherwise you might have to pay the same fee again to renew the Payday Loan. You might even find yourself borrowing more money to pay off more debt which can make you stuck in a deadly debt cycle.
Payday Loans, although being a very convenient way to obtain quick money when needed, come with heavy fees which are almost like interest rates. If we treat the fees on Payday loans as interest and you have borrowed $150 from the bank, the $30 fee that is being added to it is about 60% interest. When people find themselves unable to pay the principal, they keep paying the fee to renew the debt and end up paying a lot more than they borrowed.
If you are facing this situation, you are not alone. About 80% of the people taking out Payday Loans get stuck in similar situations. There are some steps that a person can take though, to make sure they can eventually get out of it. It is hard work but eventually, they can be free of the debt cycle.
First Things First
Stop taking more loans to pay off the debt. You need to start building your credit score so you can benefit from low fee loans. Credit scores can really help you out along the way. With a credit score of up to 700, you can get amazing deals.
It may be time to make some changes in your life. You may consider moving to an apartment which has lower rent cost or selling your car to avoid vehicle related expenses. Try to save up a little bit that you can contribute each month to paying back the principal to your Payday Loan company. Do not just renew the Loan.
In some cases, people may think they cannot afford to pay the extra money that they had borrowed. In such cases, seeking credit counseling benefits people a lot. It is important to seek a non-profit credit counselor.
Create a Budget
Creating a Budget can really help people. There are many small expenses that we make every day without realizing that they are a major chunk of our income gone, over a period of a month. An example could be payment for a bus ride to a nearby shop. To avoid spending more, avoid traveling unnecessarily because everyday costs like these become a huge amount in total and if saved, could fill up your piggy bank faster than you think.
For the future, when you consider taking a payday loans, carefully evaluate the other choices and then make the decision. If you think you will be able to pay the debt within a month or two, then do so, otherwise try to cut down other expenses and pay from your savings, but do not rollover the debt for the next payday.