Finding Ways Out Of Payday Loan Cycles

We have learned that payday loans, while a great way to get cash fast, may not be the best way to do so. The add fees are very high. The repayment cycle is short which doesn’t allow much time to make up the money. The payday loans have high interest rates and really low loss. So, the business of payday loans is booming for the payday loan companies as more and more people turn to them for help. But, those same people, the borrowers are getting caught in a bad cycle of needing help. Time and time again, they need to go back to the payday loan company. Time and time again, they need help finding ways to make ends meet. But, is the payday loan the only way?

The answer is no. There are many reasons that people need payday loans. Sometimes, it is simply an unexpected bill and the loan will be paid off in time. But, for others, it is more than likely not that simple. In some cases, it is because people do not have the money they need to pay off their normally occurring bills on time. For example, you have a car and the payment is due on the first of the month. You are worried you will not have the cash so you borrow it from a payday loan company. You get a simple cash advance. Instead of just paying the money off in your next check, you don’t want to run the risk of being late on another payment, so you roll over the original loan amount. Everything is taken care of. Great.

Let’s say that for the loan, you had to borrow three hundred dollars. The fees were the average fifteen dollars per one hundred. In this case, you paid forty-five dollars the initial time you opened the loan. Then, you paid another forty-five dollars to roll it over. It cost you ninety big ones to make your payments on time. The average car loan would have charged you only fifteen dollars for being late. By using the payday loan, you just cost yourself, are you ready? You just cost yourself seventy-five bucks!

In that example, it would have been more sensible to simply be late and pay the fees that way. The same goes for your credit card payments. The minimum pay due is often only a fraction of what the payday loan company will charge you. Sad as it is, though, we don’t see this and we end up costing ourselves big money over time. The fees and the need to continuously roll over the debt that you owe the payday loan companies ends up leading people into debt not helping them to get out of it. Do you know what increased debt and no way to pay it off leads to? It all leads to bankruptcy.

Is there another way to get the money you need without using a payday loan? Are there other methods, other ways to avoid this horrible cycle before it starts? Yes, there is and they may work for you and they may not.

The best bet to pay off debt that you owe to creditors is to talk to the creditors themselves. Tell them you can make a partial payment. Tell them you are trying to get caught up. Ask them to allow a smaller payment this time. You will be surprised at how many will help you get out of the problem if you work with them. Another thing you can do is to set up a payment plan to help you get caught back up. By talking to your creditors about these things, they will be able to meet your needs without having to resort to another loan on top of those you already can not pay.

You can also look to your employer for help. See if your employer can help you with an advance on your earnings. Tell them your circumstances and see if they can’t help you get back on your feet. Or, if you are behind on utilities, you can turn to your city, your church, or even the utility companies for help. Often times they have programs set up to help those who are in need. Again, by asking for help you can avoid the downfalls of a payday loan.

In serious situations, you may want to consider consumer credit counseling services that can help you reestablish payments with your creditors at rates you can afford. They can lump payments together and often get you a lower rate as well. Or, if your credit is okay, you may want to think about taking out a loan through a military loan establishment, credit union, or even a small consumer loan that will help you cover the bills and get caught up. While you will still be responsible for paying the money you owe, you will only have to pay one creditor instead of several.

Using these solutions can help you save money by avoiding the downfalls of the payday loan companies. Cash advances through these loans can hurt you if you don’t use them wisely. Considering other sources may just help you get back on your feet for good.

However, for the emergency situation, sometimes they are the only way to get a car fixed so you can go to work or cover another serious situation. Think before you sign and determine exactly how you will pay the money back without going into the cycle of returning each month for another loan or a rollover of your existing loan.